- Jobs data released this week showed that the domestic employment picture remained robust in July. According to the Bureau of Labor Statistics, the U.S. economy added 209,000 jobs and the unemployment rate ticked down to 4.3%.1
- Before July’s employment report was released this week, Boston Fed President Eric Rosengren noted in an interview that he sees “some reasonable risk” the unemployment rate will fall below 4.0% in the next two years.2 He echoed some other members of the Fed, saying that tight labor markets would keep the FOMC on its path toward gradually raising interest rates.2
- However, weakening inflation pressures this year appear to be undermining the Fed’s plan to gradually normalize the federal funds rate. For example, the personal consumption expenditures (PCE) index, the Fed’s preferred measure of inflation, fell to 1.4% in June 2017.3 After reaching 2.2% in February 2017, the index has fallen in each month since.3 The core PCE index has followed a similar pattern, standing flat for the second straight month at 1.5% in June.3
- Globally, consumer prices have seen similar trends. The Organisation for Economic Co-operation and Development (OECD) this week released a report highlighting a slowdown in global inflation data. Across G20 nations, for example, annual inflation in June 2016 rose at its slowest pace since 2009, just 2.0%.4
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