19 December 2022 | Macroeconomics | CEOs

Powell prioritizes U.S. wage increases to fight Fed inflation in 2023

Federal Reserve Chair Jerome Powell is cautiously analysing the cost scale of various services in the labour market. This initiative is motivated by the fact that wages can impose particularly large costs on certain services. In November, the chairman outlined this problem in his final speech to the Brookings Institution before the Fed's last interest rate hike. Powell explained the labour market is the key to understanding inflation in this category. 

In his press conference, after the decision was announced, Powell came back to the topic. Now, he said, wages are getting well above the level that would correspond to 2% inflation.  

At this point, Fed members intend to find out if the increase in U.S. wages over the past 18 months is a one-time event. Companies are having to adapt to labour shortages. Besides that, the amount of wages paid to employees does not correlate with their workload. There is also the other situation when wage increases become a loop where price and wages mutually increase.

At this point, it is still difficult to analyse the U.S. labour market. This is due to the fact that businesses are still dealing with the massive disruptions caused by the pandemic.

Company MarketCheese
Period: 29.11.2024 Expectation: 700 pips
AUDCAD does not exit downward trend lines
22 November 2024 32
Period: 02.12.2024 Expectation: 560 pips
Brent oil on its way up after exiting bilateral pattern
22 November 2024 104
Alexandra_Belova
Alexandra_Belova

Listed among the best MarketCheese authors
1st in the segment "Oil and gas"
2nd in the segment "Currencies"
Period: 26.11.2024 Expectation: 2840 pips
Selling USDJPY with target at 152.00 influenced by BoJ policy
21 November 2024 87
Elena_Dorokhina
Elena_Dorokhina

Listed among the best MarketCheese authors
1st in the segments "Currencies" and "Metals"
2nd in the segment "Oil and gas"
Period: 25.11.2024 Expectation: 700 pips
EURUSD can not move far away from 1.052 level yet
20 November 2024 83
Period: 12.12.2024 Expectation: 2080 pips
Canadian statistics reverse USDCAD to selling
20 November 2024 65
Elena_Dorokhina
Elena_Dorokhina

Listed among the best MarketCheese authors
1st in the segments "Currencies" and "Metals"
2nd in the segment "Oil and gas"
Period: 30.11.2024 Expectation: 660 pips
Selling AUDCAD to 0.9040
20 November 2024 45
Go to forecasts