Why May’s Jobs Data Complicates Inflation Picture for the Fed

Some Fed officials have previously said that they favor holding off on a rate increase in June. Patrick T. Harker, the president of the Federal Reserve Bank of Philadelphia, said this week that he was “definitely in the camp of thinking about skipping any increase at this meeting.”

And, in a signal that a pause might be imminent, a key official underlined this week that taking a meeting off from rate increases would not mean that the Fed was done raising interest rates altogether.

“A decision to hold our policy rate constant at a coming meeting should not be interpreted to mean that we have reached the peak rate for this cycle,” Philip Jefferson, a Fed governor who is President Biden’s pick to be vice chair of the institution, said in a speech on Wednesday.

“Indeed, skipping a rate hike at a coming meeting would allow the committee to see more data before making decisions about the extent of additional policy firming,” Mr. Jefferson added. The Fed vice chair is traditionally an important communicator for the institution, one who broadcasts how core officials are thinking about the policy path forward.

Fed policymakers will receive additional information about the economy before it must decide on policy: The Consumer Price Index inflation report is set for release the day that their June meeting begins. Given that, and given the conflicting messages in the jobs report, they may avoid revising their plans too sharply.

“It’s just a weird, crazy mix,” Ms. Coronado said of the employment figures.

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