Powell highlights cooling labor market as sign that rate cuts could be near
The Fed chairman stated that cutting rates "too late or too little could unduly weaken economic activity and employment."
Federal Reserve Chairman Jerome Powell
Federal Reserve Chairman Jerome Powell commented that the U.S. economy is currently experiencing a cooling labor market, while prices remain high.
Powell specifically stated that the labor market has "cooled" but remains "strong." However, the latest employment data report shows that while hiring remained solid in June, the unemployment rate continued to rise for the third consecutive month to 4.1%.
Lower interest rates and financial risks
In a statement, the Fed chairman pointed out that some present economic factors could be the path to begin with a reduction in interest rates. Also, in his semiannual testimony before Congress, he made clear that "it doesn't seem likely that the next policy move would be a rate increase ... As we make more progress on inflation ... we begin to loosen policy at the right moment."
Regarding financial risks, Powell noted that "elevated inflation is not the only risk we face" since, the reducing rates "too late or too little could unduly weaken economic activity and employment." He also added that the economy's growth has been slowing down after a strong expansion in the second half of last year.
June's data indicate a slowdown in job creation
The Department of Labor report revealed that the unemployment rate in the country increased in June, reaching 4.1%, while job creation slowed from the previous month.
In total, according to AFP, 206,000 jobs were created in June compared to the 218,000 generated the previous month. Of these new jobs, one-third belonged to government positions.
The unemployment rate was expected to hold steady at 4%. The department's report marks the slowdown in activity in the manufacturing and service sectors. Likewise, part-time jobs decreased by about 49,000.
In that regard, CNN also explained that Americans' wages are growing at the slowest pace in two years.
"U.S. workers made $35 an hour, on average, in June, up 10 cents from May. From a year earlier, average hourly earnings were up 3.9% in June," the news outlet reported.
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