The Federal Open Market Committee’s two-day deliberations began against the backdrop of a slowly climbing unemployment rate, which at 4.1% sits at its highest level since February 2018.
Labor market optimism has also been dulled in recent weeks. The economy is adding jobs at its slowest pace for a decade, while about 1.5 million unemployed Americans have been without work for 27 weeks or more.
Inflation, meanwhile, appears to be trending in broadly the right direction. Bureau of Labor Statistics figures released earlier today showed the employment cost index – a key inflation gauge watched by the Fed – increased by less than expected in the second quarter, rising by 0.9% compared with economists’ expectations of a 1.0% uptick.
The overall consumer price index (CPI) saw its slowest annual pace of growth in a year, according to the Labor Department, hitting 3% and falling for the third time in a row.
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