Everyday Economics: Fed holds steady, but signals shift

(The Center Square) – Last week’s Fed meeting was not a surprise because policymakers held rates steady. Markets expected that. The surprise was the tone. Chair Jerome Powell acknowledged that growth has held up better than expected and described the labor market as soft but broadly unchanged. “While job gains have remained low, the unemployment rate has been little changed in recent months,” he said. He also noted that other labor indicators, including hiring, layoffs and wage growth, “generally show little change in recent months.” That matters because it helps explain the Fed’s current posture. Officials no longer see weak payroll growth alone as enough reason to ease. The break-even pace of job creation has fallen as labor-force growth has slowed, so very low job gains can still be consistent with a stable unemployment rate. In other words, the bar for worrying about the labor market has moved higher. Powell offered little reassurance