「Fed's Microphone」: Non-Farm Payrolls Data Implies Fed's Focus Will Shift from Employment to Inflation

BlockBeats News, May 8th, the "Fed Oracle" Nick Timiraos stated that a major issue the Fed faced four months ago was whether it needed to continue cutting rates to support the seemingly faltering labor market. This issue is now moot. The labor market has stabilized, and due to tariffs and the Iran war, inflation is shifting from a previous downtrend to an upward trajectory.

The April nonfarm payroll report highlighted this shift in outlook, implying that as the market evaluates the Fed's next policy move, which currently seems firmly on hold, the focus will squarely turn to inflation data. April recruitment remained robust, the unemployment rate held steady, and income growth remained resilient, none of which serves as a rationale for rate cuts.

With the labor market providing the Fed with continued patience, the next step in policy discussions will be when and how to shift to a "neutral" stance—where the possibilities of rate hikes and cuts are roughly balanced—which may largely hinge on future inflation data.