By Isaac Cohen*
At the end of the last Open Market Committee meeting, central bank Chairman Jerome Powell indicated that, instead of “additional firming,” further monetary policy tightening “will be driven by incoming data meting by meeting.” https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20230503.pdf
Thus far, several indicators are pointing to a moderate cooldown in the US economy, which has led some analysts to the conclusion that in June the central bank may pause interest rate increases.
For instance, at 1.1 percent, this year’s first quarter economic growth was modest, while sectors such as housing weakened due to higher mortgage rates. Even the still strong labor market, as evidenced by the creation of 253,000 new jobs in April, is showing moderate indications of a slowdown.
Revised figures of average monthly job creation in this year’s first quarter, at 222,000, are far from the monthly average of 400,000 reached throughout 2022. True, the 3.4 percent April unemployment rate was the lowest in more than 50 years. However, layoffs among big technology and finance companies pushed upward unemployment insurance claims to 264,000, in the first week of May. Also, in April inflation as measured by the consumer price index was slightly lower, but at 4.9 percent from a year earlier was still far from the 2 percent target.
New figures for inflation and employment will be released before the next central bank meeting, scheduled for June 13-14.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.