US policymakers must walk a fine line between raising interest rates to calm the economy and avoiding a labour market collapse.
And Fed officials are gathering Tuesday for a two-day meeting that could see them raise rates again to lower inflation sustainably back to a 2% target — potentially adding pressure on employment — or hold them at current levels.The Fed has a dual mandate that involves promoting stable prices and maximum employment, and walks a tightrope between lifting rates to cool the economy while averting a damaging labour market downturn.
“Usually when unemployment rate is so low, we don’t get repeatedly 200,000-plus jobs,” she said, referring to the hiring pace until May this year.In another sign of resilience, the employment-population ratio among 25-54 year-olds is close to record levels, according to economist Elise Gould of think-tank the Economic Policy Institute.
“Because of the better balance sheets of firms, large ones especially, and households, we know there is going to be a larger lag in term of impact,” she said.
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