In the United States, the fourth quarter of last year saw job cost growth fall short of market expectations. With new signs of slowing inflation, the Federal Open Market Committee (FOMC) has strengthened its argument for reducing rate hikes at its meeting this week.
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The employment cost index rose more than 1% for the sixth consecutive quarter, breaking the longest record since 1996, when statistics began.
Source: Bureau of Statistics, Department of Labor
Several other indicators also point to slowing wage growth, and the Labor Costs Index fits that trend. But that still isn’t enough to convince the Fed that inflationary pressures on those fronts have completely subsided. Officials have insisted they are far from done and might keep interest rates high for a long time.
The Federal Open Market Committee (FOMC) has been meeting since the 31st, and the market is expected to slow down the rate hike to 0.25 points. The FOMC will announce its policy decisions on February 1.
Bloomberg Economics economist Anna Wong said: “The slowdown in fourth-quarter employment cost index growth signals disinflation in core services. Slower wage growth should prompt the Fed to slow down the pace of rate hikes. “But I don’t think we’ll stop raising it to at least 5%.”
Wages and salaries for non-military workers rose 1% in the fourth quarter. Benefits increased by 0.8%.
See table for detailed statistics.
Original title:US Labor Costs Trail Forecasts, Adding to Slower Inflation Signs(excerpt)
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