(Washington) The American central bank (Fed) must begin to lower its rates at its next meeting, in mid-September, and this easing must not be the last, declared Friday one of the governors of the monetary policy institution. On the employment side, the slow erosion continues.
“I think it’s important that we begin the process of reducing rates at our next meeting,” on September 17-18, Christopher Waller said in a speech at the University of Notre Dame in Indiana.
And “I don’t think this first cut will be the last,” he stressed, judging “likely that a series of cuts will be appropriate,” although the pace is “difficult.” [à] determine “.
Fed Chairman Jerome Powell signaled in late August that the institution’s leaders intended to launch the move, saying that “the time has come.”
The Fed, in an effort to curb high inflation and bring it back to its 2% target, has gradually raised rates in recent years to their highest level in 20 years, in the range of 5.25 to 5.50%.
But it is now careful not to weigh too heavily on economic activity, which could cause significant damage to employment.
“I continue to believe that [ramener l’inflation à 2 %] “can happen without major harm to the labor market. But I also believe that maintaining momentum in the economy means, as Chairman Powell recently said, that now is the time to start lowering rates,” Waller said.
The central banker said he was “open-minded about the scale and pace of the cuts.”
Mixed employment situation in the United States in August
Unemployment rate down, job creation up, but less than expected: the labor market in the United States continues its slow erosion, two months before the presidential election and while the Fed is preparing to lower rates to avoid a surge in unemployment.
The unemployment rate fell slightly to 4.2% from 4.3% in July, according to figures released Friday by the Labor Department.
In addition, 142,000 jobs were created in the private and public sectors, particularly in the construction and health sectors, more than the 114,000 in July, but less than expected.
PHOTO OLIVIER DOULIERY, ARCHIVES AGENCE FRANCE-PRESSE
The unemployment rate in the United States fell slightly as expected, to 4.2% from 4.3% in July, according to figures published Friday by the Labor Department.
In addition, job creations for the previous two months were revised, showing 86,000 fewer jobs than reported that were created, after a significant downward revision, already, to job creations for 2023 and early 2024.
President Joe Biden, however, praised the good health of the job market: “thanks to our work to save the economy, nearly 16 million new jobs have been created” since he arrived at the White House in January 2021.
The issue will weigh heavily in the choice of voters, called to vote on November 5 between the Democratic Vice President Kamala Harris and the former Republican President Donald Trump.
“The employment numbers are terrible,” he told reporters in New York on Friday. Earlier, he had criticized his rival in a statement: “The warning signs are flashing as Kamala’s economy continues to weaken.”
“Risk to employment”
“An undeniable and widespread decline in hiring is now underway,” Ian Shepherdson, president and chief economist at Pantheon Macroeconomics, said in a note.
Concerns are growing about the employment situation in the coming months, after two years of particularly strong job growth, with an unemployment rate at its lowest.
A Fed official, New York Fed President John Williams, had stressed earlier Friday that at this point, the unemployment rate has risen, but “remains relatively low by historical standards.”
PHOTO ANDREW KELLY, REUTERS ARCHIVES
New York Central Bank President John Williams
“Part of this increase reflects a slowdown in the previously overheated labor market,” but also an increase in the number of workers, rather than a high number of layoffs, he added.
There are many signs that the golden age of employees being able to easily change jobs and increase their pay is over.
The number of vacancies thus fell at the end of July to its lowest level since January 2021, before the country experienced a significant labor shortage, the JOLTS survey published by the Labor Department showed on Wednesday.
A Fed survey conducted over the summer showed that some parts of the United States are seeing a slowdown in the labor market, with employers being more selective and, as a result, candidates taking longer to find jobs.
One employer in northern Minnesota, for example, reported that “many companies are becoming much more picky” about who they hire.