US Fed chair Jerome Powell highlighted growing risks from weakening hiring, suggesting further rate cuts ahead. He noted that while inflation remains high, safeguarding jobs has become the central bank’s main concern.https://t.co/Y7m5WBAtWp
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Labor market shows signs of strain
While the unemployment rate has held near historic lows, payroll gains have slowed sharply. “In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen,” Powell said.
He noted that both layoffs and hiring remain low, but perceptions of job availability among households and hiring difficulty among firms are trending downward.
ADP revealed that the private sector shed 32,000 jobs in September, while Challenger, Gray & Christmas reported 54,064 job cuts for the month. Hiring plans, meanwhile, have collapsed to the lowest level since 2009.
Diverging views on inflation and growth
Other central bank leaders echoed Powell’s concerns. John Williams, president of the New York Fed, said last week he saw “more downside risks to the labor market and employment” than to inflation, supporting a cautious approach to further rate cuts.
“My own view is that, yes, we would have lower rates this year, but we’ll have to see exactly what that means,” Williams said in an interview.