SAN FRANCISCO, Nov 18 - A tight U.S. labor market is still adding to inflationary pressures, though less so than it did in 2022 and 2023, according to research published on Monday by the San Francisco Federal Reserve.
The finding, based on an analysis of the relationship between inflation and labor market heat as measured by the ratio of job openings to job seekers, could help inform Fed policymakers as they weigh how much further and at what pace to reduce short-term borrowing costs. After a second rate cut earlier this month, the rate now sits in the 4.50%-4.75% range. U.S. central bankers believe that level is high enough to keep the brakes on the economy, but there is broad internal disagreement over how restrictive the rate is, and therefore about when and how much to cut it further.