The Federal Reserve approved a rare half-percentage-point interest rate increase and announced plans to shrink its $9 trillion asset portfolio starting next month in a double-barreled effort to reduce inflation that is running at a four-decade high. The moves, announced after a two-day policy meeting Wednesday, will raise the central bank’s benchmark federal-funds rate to a target range between 0.75% and 1%, according to The Wall Street Journal.
Fed Interest Rates Live Updates: Powell Raises a Half Percentage Point (The Wall Street Journal)
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Excerpt from The Wall Street Journal: These steps mark the most aggressive Fed tightening of monetary policy at one meeting in decades, aimed at rapidly reducing the economic stimulus that has contributed to rising price pressures. Major stock indexes rose after Fed Chairman Jerome Powell said the central bank is not "actively considering" raising interest rates in three-quarter percentage point increments. Mr. Powell’s comments offered relief to investors who had become increasingly fearful that the Fed could raise interest rates too far, too fast and eventually tip the economy into a recession.
On the labor side of the economy, U.S. employers saw record levels of job openings and workers quitting in March, pointing to intensifying labor-market tightness that will keep pushing wages higher at a rapid clip, reports Bloomberg.
The number of available positions increased to 11.5 million in the month from 11.3 million in February, the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS.
U.S. Job Openings Rose Unexpectedly to Record 11.5 Million (Bloomberg)
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Excerpt from Bloomberg: A series high of 4.5 million Americans quit their jobs in March, in data back to 2000. The quits rate, a measure of voluntary job leavers as a share of total employment, rose slightly to 3%. The vacancy figures suggest that employers’ needs for workers remained strong in March as employers staff up to meet solid consumer demand for goods and services. Businesses are also still struggling to recruit qualified workers, which has put upward pressure on wages and led to a surge in job openings.
In a related story, the U.S. economy added 428,000 jobs in April and the unemployment rate remained at 3.6%, marking the 12th straight month of job growth above 400,000, writes The Wall Street Journal.
The stretch of employment gains is the result of a tight labor market that has held up despite rising interest rates, jittery stock markets and growing fears of a slowdown.
U.S. Economy Added 428,000 Jobs in April (The Wall Street Journal)
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Excerpt from The Wall Street Journal: In one sign that the labor market remains exceptionally tight, the civilian labor force shrunk by 363,000 workers last month, the Labor Department said Friday. The decline in the labor force level followed a gain of more than 400,000 in March. Demand in the U.S. has continued to be strong—Americans are still spending at a solid clip, particularly on services such as concerts and travel. Employers are trying to hire workers to accommodate those customers and posted 11.5 million job openings earlier this spring, the highest in records dating to 2000.
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