"Fed Whisperer": Nonfarm payrolls mean the Fed's focus will shift from employment to inflation

According to Odaily, "Fed Whisperer" Nick Timiraos stated that four months ago, a major question facing the Federal Reserve was whether it needed to continue cutting interest rates to support the seemingly fragile labor market. That question no longer exists. The labor market has stabilized, and due to tariffs and the impact of the war in Iran, inflation is shifting from its previous decline back to a rise.

The April nonfarm payrolls report highlights this shift in outlook and means that in determining the next policy direction for the Fed, which is currently firmly on hold, market focus will clearly turn to inflation data.

April's hiring activity remained solid, the unemployment rate held steady, and income growth remained robust—none of these factors are sufficient to justify a rate cut. With the labor market giving the Fed room to wait, the next step in the policy discussion will be when and how to move toward "neutral"—where the probability of rate hikes and cuts becomes roughly equal—and the answer may depend almost entirely on future inflation data. (Jin Shi)