Fed Chair Powell and European Central Bank’s Efforts to Tame Inflation; Private Employment Report Anticipated to Provide Comprehensive Picture of Labor Market

Federal Reserve Chair Jerome Powell highlighted the progress made by the European Central Bank in bringing down inflation during a roundtable discussion at a conference in Portugal. He mentioned that the Personal Consumption Expenditures (PCE) price index has steadily decreased since reaching its peak in June 2022, despite some bumps in the road in the first quarter of this year. Powell emphasized the need to ensure that inflation is sustainably moving towards the Fed’s target of 2% before considering any adjustments to monetary policy.

Looking ahead, economists anticipate that upcoming reports on private employment and employment from the Bureau of Labor Statistics will provide a more comprehensive picture of the labor market. The ADP private employment report and employment report set to be released on Friday are expected to show an addition of 200,000 jobs in the previous month, with the unemployment rate remaining at 4%. This decrease from May’s 272,000 jobs added indicates a more balanced labor market.

In May, job openings remained relatively unchanged from the previous month, surprising economists with the resilience of the labor market. The Bureau of Labor Statistics reported 8.1 million job openings, surpassing the estimated 7.9 million. Additionally, figures for hires, quits, and layoffs were also stagnant. This stability in job openings is seen as positive news for the Federal Reserve, providing them with more time to evaluate the economy’s direction before considering any adjustments to interest rates.