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

Odaily Planet Daily News "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 a labor market that appeared to be on shaky ground. Today, that question no longer exists. The labor market has stabilized, and due to tariffs and the war in Iran, inflation is now shifting from its previous decline back to rising.

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

Hiring activity in April remained steady, the unemployment rate was unchanged, and income growth remained resilient—none of which are sufficient to justify a rate cut. With the labor market giving the Fed room to continue waiting, the next step in the policy discussion will be when and how to shift to "neutral"—where the likelihood of a rate hike and a rate cut becomes roughly equal—and the answer may depend almost entirely on future inflation data. (Jin Shi)