The job market held up in May. But the Fed may have already decided to pause | CNN Business

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The US labor market picked up momentum in May. But Federal Reserve officials could still suspend rate hikes in their upcoming policy meeting because of broader trends pointing to a weakened economy later in the year.

The debate over suspending rate increases or hiking yet again later this month has remained intense, and May’s robust jobs report certainly makes it even more difficult to decipher what’s going on in the economy, but there seems to be enough of an argument for Fed officials to defend a pause, or a “skip,” in rate increases when they meet on June 13-14. That would snap a streak of 10 consecutive rate hikes that raised the central bank’s benchmark lending rate to a range of 5-5.

That’s good news for American workers, but the jury is still out on whether that’s a good or bad thing for inflation. Some top economists have argued that the strong labor market has had a minor, albeit growing, impact on inflation. “If you’ve talked to CEOs, you’d know they largely agree that there was a significant inflation issue about a year ago, but that has really moderated over the last year even as the labor market remains pretty tight,” said Dave Gilbertson, a labor economist at UKG.

 

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