As economy strengthens, Federal Reserve poised to raise rates again this year
The U.S. economy was hindered by the havoc caused by hurricanes last month, with the country registering the first monthly job loss in seven years in September. While payrolls declined by 33,000 – marking the end of the longest stretch of job creation on record – the unemployment rate fell, reaching a new 16-year low of 4.2%, and worker’s wages improved.
The devastating hurricanes distorted the jobs data and their impact on the economy should continue for a while. Nonetheless, the labor market remains a bright spot and there are significant pockets of strength in the economy that should keep the Federal Reserve on track to raise rates for a third time this year in December despite persistently low inflation.
Minutes from the central bank’s September 19-20 policy-setting meeting showed that while most Fed officials are leaning toward raising rates once more this year, they are continuing to debate whether a string of weak inflation readings indicates temporary weakness or a longer-lasting development. However, Fed Chairwoman Janet Yellen recently said in a speech that it would be “imprudent” for the central bank to wait for inflation to return to its goal of 2% before raising rates again.