Jerome H. Powell emphasized that the Fed is closely monitoring the job market amid considerations of lowering interest rates. Inflation control and wage gains play a crucial role in determining the future course of borrowing costs.
Mr. Powell hinted at the possibility of rate cuts if inflation decreases or if there are unexpected signs of cooling in the job market. Conversely, persistent inflation paired with a strong labor market could lead to unchanged rates.
While the Fed does not specifically target wage growth, Powell suggested that slowing wage gains might be necessary for inflation to be controlled effectively and sustainably. Rapid wage growth can contribute to elevated inflation.
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