Source: Bloomberg

Steve Matthews

The Fed Chairman Jerom Powell said whether to return to a significant interest rate hike depends not only on the employment report on Friday, but economists believe that this data is enough even if it only shows a little strong.

Decision makers will carefully study three key indicators in non -agricultural data in February: new employment, salary growth and unemployment rate.If these data indicate that the labor market is strong, perhaps as long as it is slightly stronger than expected, it will be the Federal Reserve's green light with a greater interest rate hike, which may reduce the suspense of inflation reports released next week.

Economists surveyed by Bloomberg News predict that the number of non -agricultural employment in February increased by 225,000.Although this is only about half of the amazing increase in January, if the number announced is roughly or higher than this level, it will confirm that the US economy is still strong and is increasing employment at a strong speed.The wishes of the level of growth and to alleviate price pressure run counter to the end.

The stronger the number, the greater the risk of acceleration, "said Michael Gapen, the US economy head of the United States.He believes that the number of non -agricultural employment is the most important indicator for the Fed because it shows "the current momentum", and the unemployment rate and salary data are slightly lagging.

Powell said during the two -day testimony of testimony that the turn to faster will be based on "overall data", including the latest data about employment, job vacancies, consumer prices and producer prices.He pointed out that the recent reports that are stronger than expected show that the economic performance is strong and inflation is "rugged".

Following the testimony of Powell on the first day of Powell on Tuesday, futures transactions show that the possibility of rating 50 basis points in March is more likely to raise interest rate hikes.The Federal Public Marketing Committee will hold a meeting on March 21-22.

"If -I want to emphasize that it has not made a decision -but if the data overall shows that it is necessary to accelerate the tightening, then we are going to raise the pace of interest rate hikes," Powell said on Wednesday.

On Wednesday, the economist of Citi Group amended their views, and now it is expected that the Fed will raise interest rates at 50 basis points at the March meeting.The vacancy data released on Wednesday shows that the vacancies in January decreased in January, but the level of the Fed's expectations may still be too high.

The eagle tone of Powell's comment allows economists to believe that the number of new employment of more than 200,000, and the significant slowdown in salaries and prices can occur to rate hikes at 25 basis points.

Although the growth of non -agricultural employment in the United States has exceeded expectations for 10 consecutive months, many economists believe that the growth of 517,000 in January is affected by seasonal adjustment and a group value.

"You need to have a big downside accident in employment and inflation in order to return to 25 basis points," said Diane Swonk, chief economist of KPMG.

The Fed has always been worried that the salary level will lead to potential salary -price spiral increase, so decision makers will also pay attention to the average hourly salary.Economists predict that this salary indicator may rise by 0.3%for the second consecutive month.

If the salary increases 0.4%or 0.5%, "it will really cause their alertness," said Derek Tang, an economist in Washington, a economist in Washington."Now they really care about wages because it will affect inflation. They care about the labor market too tight and it is being promoted."

Powell particularly emphasized the inflation of the labor -intensive service industry, because these industries have increased prices for the competition of recruiting employees.

Regarding the unemployment rate, although economists are expected to remain at a 53 -year low of 3.4%, if further decrease, it will indicate that the market has become tight.According to the estimated median value, the Federal Public Marketing Committee (FOMC) last December predicted that the unemployment rate would rise to 4.6%by the end of the year.

If the new non -agricultural employment, unemployment rate and salary data have some contradictions. For example, a strong and other two weakened may cause the confusion of 25 basis points or 50 basis points.

"There may be a variety of combinations that make you unable to rely on one number," Michael Feroli, chief American economist, chief American economist."If the report is ginseng half, then the CPI data next week may become more important."

The

Consumer price index will be released on March 14, and the producer price index will be announced one day.Because the Federal Public Marketing Commission will enter the so -called silent period from March 11, Powell and other Federal Reserve officials will not comment after these reports.

In fact, it is not only the Fed's interpretation of employment reports.The market's pricing of the March meeting may also be very important because the Fed may be unwilling to oppose the betting of the market.

"If the market reflects the possibility of 50 basis points in interest rate hikes, it will put pressure on the Federal Reserve to follow up, because otherwise the financial environment may be relaxed from the current level," the chief economy of the NATIONWIDE LIFE Insurance Co.Scholar Kathy Bostjancic said."The Federal Reserve has been difficult to tighten the financial environment in the past few months, so they may not want to relax them again."