Fed Talk
Overall, this data points to a strengthening employment sector, not weakness. It likely all but eliminates the possibility of the Fed cutting key rates at their FOMC meeting at the end of this month. The Fed’s two mandates are to control inflation and help maximize employment. This is why we often hear Fed speakers reference the employment sector and inflation. The fact employment is clearly not crumbling at this point undermines the theory that the Fed needs to start cutting short-term rates to support the sector. It more or less buys them more time to see how tariffs and other policies will affect inflation. Making a move now that is intended to boost economic growth when employment activity is stable runs the risk of fueling higher inflation in the future. Therefore, it is highly unlikely they will make a move at this month’s meeting, opting for at least September’s FOMC meeting before acting. Unfortunately, that probably will contribute to higher mortgage rates this summer.