Fed's shift to job market risks is done; now policy has to catch up

JACKSON HOLE, Wyoming - In 2022, when the Federal Reserve's focus shifted to combating inflation, it had to ratchet up interest rates fast to get monetary policy caught up with fast-rising prices.

The answer will appear in upcoming employment reports and shape how far and fast the Fed will have to cut rates to prevent what Powell called an "unwelcome further weakening in labor market conditions." Richardson, along with many Fed officials and others in attendance, argues the economy remains strong and is likely just settling to its underlying trends - "normalizing" from the pandemic's extremes. But the sense of urgency around employment has intensified.The Fed's two-year battle against inflation saw rates rise to a quarter-century high without any appreciable job-market fallout. Officials next meet on Sept.

Apollo Global Management chief economist Torsten Slok, meanwhile, frets that with layoff rates remaining low, the Fed may still court inflation risk if it cuts rates too fast.July's job gains of just 114,000 were noticeably weaker than the pandemic-era average, but in line with what before the pandemic was considered a reasonable pace to match population growth.

Boston Fed President Susan Collins said in an interview she sensed there was an "overall resilience" in the labor market, with the unemployment rate possibly about to level off.Still, there are concerns the labor market may be weaker than it seems, risks that could play out in coming months and push the Fed towards faster or deeper rate cuts to defend its "maximum employment" objective.

Two of the mission's four-member crew will venture out of their Crew Dragon capsule in Earth's orbit for a tethered spacewalk, marking the first major test of SpaceX's new spacesuits. The mission, scheduled for launch at 3:38 a.m. ET on Aug. 27 from NASA's Kennedy Space Center in Florida, is expected to last six days, with the spacewalk planned for the third day.

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The Federal Reserve sees cooler inflation and slower job market, suggesting a rate cut is nearingWASHINGTON (AP) — The Federal Reserve said Wednesday that greater progress has been made in reducing inflation to its 2% target, a sign that the central bank is moving closer toward cutting its key interest rate for the first time in four years.
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