The red-hot economy and higher inflation haven’t gone unnoticed at the Federal Reserve, even after it kept its key short-term lending rate, the fed funds rate, unchanged last week. The Fed also said it would continue to purchase at least $120 billion in bonds each month. It did not release a plan to end or dial back the monthly bond buys.
At the height of the pandemic, Fed Chairman Jerome Powell said the Fed was not even “thinking about thinking about raising interest rates.”
That may still be the case. But the recent jump in inflation may have the Fed thinking about its $120 billion in bond purchases it makes each month.
The U.S. BLS reported last week that the Consumer Price Index (CPI) rose 0.6% in May, topping the forecast by analysts of 0.4% (Investor’s Business Daily).
The core CPI, which excludes food and energy, rose 0.7%, ahead of the forecast of 0.4%. In April, the indexes rose 0.8% and 0.9%, respectively.
During the month of April, the number of job openings in the U.S. increased a record 1 million to an all-time high of 9.3 million, per U.S. BLS data.
Since January, the number of openings has surged by over 2 million.
The U.S. BLS reported nonfarm payrolls rose by 559,000 in May. It’s above the 278,000 jobs added in April, but below 785,000 in March. The unemployment rate fell from 6.1% in April to a pandemic low of 5.8% in May.
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