Odds of a third straight 0.75 percentage point increase grow after data show the US economy is still red-hot despite the central bank’s efforts to cool it.
| The Federal Reserve will face more urgency in its fight to cool down the US economy with steep interest rate increases after the latest batch of labour market dataThe figures released on Friday eased concerns that the American economy was sharply slowing or already in recession after two consecutive quarters of contraction in output this year. However, it will increase worries that high inflation may become entrenched as wages keep rising, requiring even more intervention by the central bank.
David Mericle, chief US economist at Goldman Sachs, said the report cleared up some “ambiguity” over the strength of wage growth in the US economy, suggesting it was not easing as much as the Fed might hope. During his last press conference in July, Mr Powell said “another unusually large increase” in interest rates in September “could be appropriate” but that decision had not been made.
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