Barkin: US Job Market Is Starting to Become Fragile
Richmond Fed President Tom Barkin believes the US labor market is currently in a "weak balance." Hiring remains low, but the unemployment rate has not yet shown a significant spike.
This statement came after July labor data showed the US economy unexpectedly lost jobs. Data for the previous two months was also revised lower, although the unemployment rate fell slightly to 4.1%.
According to Barkin, current labor conditions are neither too tight nor too loose. He also stated that he has not seen significant upward wage pressure, so the current labor market is not considered to be adding pressure to inflation.
The Fed previously maintained interest rates in the 3.50%–3.75% range for the fifth consecutive year. However, several officials have left open the possibility of a rate hike if inflation rises again and moves away from the 2% target.
Barkin described interest rate policy as steering a ship. If inflationary pressures strengthen again, the Fed may need to "tighten" policy by raising interest rates. He also highlighted that the majority of recent job growth has come from the healthcare sector, which is beginning to face uncertainty regarding government policy.
Newsmaker Analysis: Barkin's comments reinforce the signal that the US labor market is losing momentum and is not yet a source of inflationary pressure. This tends to be negative for the dollar and positive for gold as it could reduce the need for the Fed to raise interest rates. However, the direction of policy remains dependent on inflation; if prices rise again, the possibility of an interest rate hike remains open. (arl)
Source: Newsmaker.id
