Federal Reserve officials have been sounding the alarm about inflation, but Friday’s jobs report may have only turned up the volume.
Fed officials have been sounding the alarm about inflation, but the latest jobs report may just have increased that amount.
The U.S. economy added 172,000 jobs in May, strengthening the case for rate hikes that Dallas Fed President and CEO Rory Logan first laid out Wednesday in prepared remarks at the University of Texas at El Paso. According to the Bureau of Labor Statistics, the national unemployment rate remained at 4.3% for the third consecutive month.
Mr. Logan is a voting member of the Federal Open Market Committee, the body that determines the Fed’s interest rate policy.
laurie logan
“We are increasingly concerned that we may need to raise rates this year to fully restore price stability and properly balance the Fed’s dual responsibilities,” Logan said.
Logan said inflation has hovered around 4% over the past 12 months due to the impact of higher tariffs and the oil price shock from the Iran war, and appears to be trending towards the mid-2% range rather than fully returning to the Fed’s 2% target.
He said economic conditions, such as the more than 25% growth in S&P 500 profits in the first quarter and continued AI investment, suggest that monetary policy is not enough to slow growth.
“This situation shows that monetary policy is not restraining the economy,” Logan said.
According to the BLS report, employment growth in May was led by leisure and hospitality, with 70,000 new jobs, followed by local government with 55,000 and health care with 35,000. Financial services cut 22,000 jobs.
Mr. Rogan was one of three FOMC members to dissent at the Fed’s April meeting, arguing that the central bank should show it is just as likely to raise rates as it is to cut them. His remarks and Friday’s jobs report came two weeks before new Federal Reserve Chairman Kevin Warsh takes the helm at his first FOMC meeting.
Email Jesse Healy
