'Fed Whisperer': July Nonfarm Payrolls Signal Difficult to Interpret, Inflation Becomes Key Variable for Rate Hikes

BlockBeats News, August 7 — Wall Street Journal reporter Nick Timiraos stated that the July employment report will be a challenging dataset for the Federal Reserve to interpret. Evidence that the labor market has not reaccelerated may reduce the urgency for a rate hike next month, but this still depends on better inflation data. The decline in the unemployment rate will continue to keep the market focused on inflation data. Whether price pressures are rising or falling will determine whether more officials conclude that they cannot maintain their inflation target predictions without keeping rates unchanged. A moderate inflation report will strengthen the case for holding rates steady (as two consecutive months of moderate data begin to show a trend rather than noise). Conversely, strong data will once again challenge forecasts and give officials opposing rate hikes an opportunity to secure a fourth supporting vote.