When will the Federal Reserve’s interest rates medicine start to work?

Federal Reserve Board chairman Jay Powell wants to ease what he sees as an unhealthily hot labour market. He and his colleagues have raised the Fed’s benchmark interest rate ten times in the past 14 months, from approximately zero to 5-5.25 per cent — a 16-year high. If they believed the consensus forecast that April’s revised job creation figure of 294,000 would decline to 190,000 in May, they were shocked on Friday when the Department of Labor reported that the economy added 339,000 jobs last month.

Earlier reports had shown that job openings rose in April to 10.1 million, from 9.7 million in March, reversing recent declines. There are now 1.8 unfilled jobs per unemployed person— with the exception of the pandemic, that’s the highest