-Inflation is easing and the job market has returned to the"tight but not overheated" situation seen before the COVID-19 pandemic threw the U.S. economy into disarray, the Federal Reserve said on Friday in a report to Congress that documented the steady emergence of more normal conditions in the aftermath of the health crisis.
"The balance between labor demand and supply appears similar to that in the period immediately before the pandemic, when the labor market was relatively tight but not overheated. Nominal wage growth continued to slow," the report said. New inflation data will be released on Thursday, and if price pressures continue easing it may prompt Fed officials to at least open the door to interest rate cuts as soon as September - a call Powell and his colleagues say will be based solely on the economics of the situation, not how it affects the political prospects of either party ahead of November elections.
Yet both Democrats and Republicans are likely to quiz Powell on whether the Fed is holding true to that standard during the two days of testimony.
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