“Fed’s mouthpiece”: Non-farm payroll data means the Fed’s focus will shift from employment to inflation

Odaily Planet Daily reports: "Fed’s mouthpiece" Nick Timiraos said that four months ago, a major issue facing the Federal Reserve was whether it needed to continue cutting interest rates to support the seemingly shaky labor market. That issue no longer exists. The labor market has stabilized, and due to tariffs and the war with Iran, inflation is now turning from a previous decline to a renewed rise.

The April non-farm payroll report highlights this shift in outlook and means that as the market judges the next policy direction of the Federal Reserve, which is currently firmly on hold, the market focus will clearly turn to inflation data.

April’s hiring activity remained steady, the unemployment rate remained unchanged, and income growth remained strong—none of which are sufficient to justify a rate cut. As the labor market provides the Fed with room to continue waiting, the next step in the policy discussion will be when and how to shift to a "neutral" stance—where the possibility of a rate hike and a rate cut becomes roughly equal—and the answer may depend almost entirely on future inflation data. (Jinshi)