"Federal Reserve's Mouthpiece": The slowdown in the job market will test the Federal Reserve's unwavering interest rate policy

ChainCatcher news, according to Jinshi reports, "Fed mouthpiece" Nick Timiraos stated that the slowdown in employment over the past three months may open the door for Federal Reserve officials to consider interest rate cuts at their next meeting in September. At the very least, this highlights the difficult balance they face amid an economic slowdown and rising inflation pressures. Due to the previously robust employment growth in the labor market, Federal Reserve officials felt reassured about keeping interest rates unchanged this year.

However, the significant downward revisions to employment data in May and June changed this situation. Federal Reserve officials had previously indicated that they had reduced their focus on overall employment growth, as it was declining alongside a slowdown in labor force growth. When labor supply decreases, even if employment growth slows, the unemployment rate may remain stable or decline. However, Fed Chair Powell pointed out this week that the stability of the unemployment rate may mask underlying weakness—when a decrease in job seekers coincides with a drop in job vacancies, this balance is essentially fragile. He mentioned the "downside risks" in the labor market six times during the press conference, suggesting that actual weakness may provide justification for policy easing.