by Rich Miller, Bloomberg News
BNN Bloomberg
(Bloomberg) — As inflation surged in 2022, the Federal Reserve moved to prevent a wage-hike spiral by jacking up interest rates. Now, with unemployment edging up, the central bank is signaling a willingness to cut rates to head off a job-cutting spiral – even if that means somewhat higher inflation for a while.
For the first time in the current economic upswing, Fed Chair Jerome Powell used his opening statement at Wednesday’s press conference to declare that a surprise increase in unemployment could prompt the Fed to lower rates. He then repeated that message several times in response to reporters’ questions.
While the Fed is waiting to be sure its inflation battle is won before cutting rates, “an unexpected weakening in the labor market could also warrant a policy response,” he said after its two-day policy meeting.