"Fed Whisperer": Nonfarm payroll data means the Fed's focus will shift from employment to inflation

Odaily Planet Daily News "Fed Whisperer" 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 is now gone. The labor market has stabilized, and due to tariffs and the Iran war, inflation is turning from its previous decline to a renewed rise.

The April nonfarm payroll report highlights this shift in outlook and means that in judging the next policy direction of the Fed, which is now firmly on hold, the market focus will clearly shift to inflation data.

April hiring activity remained solid, the unemployment rate was unchanged, and income growth remained strong, none of which are reasons enough to cut rates. With the labor market giving the Fed room to wait, the next step in the policy discussion will be when and how to turn "neutral" - meaning the chances of a rate hike and a rate cut become roughly equal, and the answer may depend almost entirely on future inflation data. (Jinshi)