The world’s most powerful central banker, Jerome Powell, has decided against following Canada’s lead and will not commit to taking a break in raising interest rates.
While specifically noting the Bank of Canada’s rate hike pause one week ago, U.S. Federal Reserve chair Powell refused to echo Canadian central bank governor Tiff Macklem’s optimism that he had inflation on the run.
“I think it would be premature, it would be very premature, to declare victory,” said Powell, at the Fed’s monetary policy news conference on Wednesday.
In many ways, Powell’s outlook on the economy was similar to Macklem’s. In some ways, it may have been a question of whether the inflation glass was half full or half empty.
Similar to Macklem, Powell foresaw that “growth would continue but at a subdued pace,” with little fear of a deep recession. In fact, Powell hinted that there may be signs of a disconnect between retreating inflation and jobs, with the high demand for labour meaning the exact opposite of a jobless recovery.
“I will say that it is gratifying to see the disinflationary process now getting underway and we continue to get strong labour market data,” Powell said.
More evidence of whether jobs can stay strong as inflation falls will come on Friday, when the U.S. Department of Labour releases January employment numbers.
This month, Canada’s different method of data collection means Statistics Canada’s jobs numbers arrive a week later. But in both economies, the previous month’s data showed job creation remained strong. Canada’s were spectacularly strong with more than 100,000 jobs created,