Rick Rieder, Chief Investment Officer of global fixed income at BlackRock, the world's largest asset manager, crossed wires via Reuters late Monday while saying, “The Federal Reserve may not need to raise interest rates further to fight inflation, as the fallout from last month's turmoil in the banking sector and a series of recent labor data point to a slowing US economy.”
Though Friday’s closely-followed Labor Department employment report showed that U.S. employers maintained a strong pace of hiring last month, it was also marked by slowing wage gains and jobs growth that was below the three, six and 12-month moving averages.
That data, together with labor market numbers released last week and expectations of tighter credit conditions after the failure of two US banks last month, paint a picture of a slowing economy.
Last Friday’s employment report, while clearly not alarming in any way, allows investors to see more clearly through to what should be a tangibly slower set of economic conditions.
Presumably, this will also see a cessation of Fed policy rate hikes after one more possible hike at the May meeting, although it’s also possible the Fed is done already.
Inflation should ease going forward, in line the economic slowing seen last month.
Hopefully ... markets can look forward to a more relaxed Fed from here.
EUR/USD pays little heed to the news as it holds lower grounds near 1.0860, despite recently bouncing off the lowest levels in a one-week.
Also read: EUR/USD scales above 1.0860 ahead of Eurozone Retail Sales and US Inflation
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