The April jobs report revealed another month of robust hiring, likely solidifying the case for the Federal Reserve to pivot toward a mega-sized interest rate hike as it seeks to cool red-hot inflation.
. It followed a smaller, quarter-point hike in March. The Fed also announced that it will start reducing its massive $9 trillion balance sheet, which nearly doubled in size during the pandemic as the central bank bought mortgage-backed securities and other Treasurys to keep borrowing cheap.
In remarks after the two-day meeting, Fed Chairman Jerome Powell told reporters that similarly sized hikes are on the table at future meetings. The question now is whether the Fed can successfully engineer the elusive soft landing — the sweet spot between tamping down demand to cool inflation without sending the economy into a downturn. Hiking interest rates tends to create higher rates on consumer and business loans, which slows the economy by forcing employers to cut back on spending
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