Jan 11, 2024: The deceleration in inflation that accelerated toward the end of 2023 has shifted the focus at the U.S. Federal Reserve to the state of the job market. Fed officials are increasingly attentive to the risks of maintaining monetary policy too tight for an extended period. They are closely monitoring signs of stress in business hiring plans and engaging in discussions with local executives about potential layoffs for the year.
The shift in attention reflects the Fed’s need to balance controlling inflation with protecting employment, especially as the U.S. presidential election approaches in November. The central question for policymakers is when to prioritize curbing inflation over potential risks to the job market. While inflation remains above the Fed’s 2% target, discussions have become more nuanced, with some officials emphasizing the need to ensure inflation control and others acknowledging the need to assess the broader economic landscape.