BAFL 52.51 Increased By ▲ 2.48 (4.96%)
BIPL 22.80 Increased By ▲ 0.39 (1.74%)
BOP 5.68 Increased By ▲ 0.26 (4.8%)
CNERGY 5.09 Increased By ▲ 0.04 (0.79%)
DFML 19.35 Increased By ▲ 0.17 (0.89%)
DGKC 80.80 Increased By ▲ 0.65 (0.81%)
FABL 33.10 Increased By ▲ 0.25 (0.76%)
FCCL 20.23 Decreased By ▼ -0.02 (-0.1%)
FFL 10.57 Increased By ▲ 0.92 (9.53%)
GGL 13.62 Increased By ▲ 0.02 (0.15%)
HBL 130.17 Increased By ▲ 8.83 (7.28%)
HUBC 122.62 Increased By ▲ 0.12 (0.1%)
HUMNL 8.05 Increased By ▲ 0.05 (0.63%)
KEL 4.45 Increased By ▲ 0.48 (12.09%)
LOTCHEM 27.92 Decreased By ▼ -0.16 (-0.57%)
MLCF 42.70 Increased By ▲ 0.50 (1.18%)
OGDC 125.61 Increased By ▲ 4.28 (3.53%)
PAEL 21.35 Increased By ▲ 1.12 (5.54%)
PIBTL 6.12 Increased By ▲ 0.32 (5.52%)
PIOC 118.00 Increased By ▲ 2.10 (1.81%)
PPL 113.85 Increased By ▲ 3.10 (2.8%)
PRL 31.80 Increased By ▲ 2.22 (7.51%)
SILK 1.10 Increased By ▲ 0.02 (1.85%)
SNGP 69.40 Increased By ▲ 0.37 (0.54%)
SSGC 13.72 Increased By ▲ 0.02 (0.15%)
TELE 9.24 Increased By ▲ 0.49 (5.6%)
TPLP 14.75 Increased By ▲ 0.08 (0.55%)
TRG 92.85 Increased By ▲ 1.55 (1.7%)
UNITY 27.50 Increased By ▲ 0.25 (0.92%)
WTL 1.66 Increased By ▲ 0.03 (1.84%)
BR100 6,815 Increased By 167.1 (2.51%)
BR30 24,245 Increased By 677 (2.87%)
KSE100 66,224 Increased By 1505.6 (2.33%)
KSE30 22,123 Increased By 529.1 (2.45%)

The U.S. Federal Reserve is likely to need at least two more interest-rate hikes, lifting the benchmark rate to above 5%, to slow an unexpectedly strong labor market seen as contributing to high inflation.

That was the betting in financial markets on Friday after the U.S. Labor Department reported employers added more than half a million jobs last month, far more than expected, and the unemployment rate fell to 3.4%, the lowest in more than 50 years.

The Fed earlier this week increased its benchmark rate by a quarter-of-a-percentage-point to 4.5%-4.75%. Fed Chair Jerome Powell said that with the labor market still tight he expects to need “ongoing” increases to get monetary policy “sufficiently restrictive” to engineer a more balanced job market and bring down too-high inflation.

Interest-rate futures prices, initially skeptical of that view, now reflect that expectation, with a better than even chance seen that the Fed will continue get its policy rate to the 5%-5.25% range by June, if not by May.

Financial markets had earlier heard Powell’s repeated references to the start of a disinflationary trend as signalling that just one more rate hike, in March, could suffice.

Fed delivers small rate hike, still expects ‘ongoing increases’

“This is the kind of report that you want to see when coming out of a recession to signal strength in the economy, not when the futures market is looking at the Fed finishing its rate hike cycle,” said Quincy Krosby, chief global strategist at LPL Financial.

Traders still expect the Fed to cut rates later in the year, despite Powell saying he does not expect inflation to fall fast enough to allow such a thing.

The Fed targets 2% inflation, now running at 5% by the Fed’s preferred measure, the personal consumption expenditures price index.

Friday’s Labor Department report did show slower growth in average hourly earnings to a 4.4% pace, from an upwardly revised 4.8% in December.

“While the Fed welcomes any signs of easing wage pressures, the pace of growth in average hourly earnings is still too strong to help lower inflation,” Oxford Economics’ Ryan Sweet wrote.

Comments

Comments are closed.