Jack Lew, the US secretary of the Treasury, is starting to see some pressure on wage growth. Basic economic theory says that when jobs are gained, wages also rise: employers compete for workers and workers feel more confident. So far, we haven’t seen too much of that: a mediocre 2% y/y growth rate was seen.
But there you have it, from a senior government official. This comes as the Fed begins its meeting. Does Janet Yellen see the same pressures? Will the Fed get ahead of the curve and raise rates sooner, well before these pressures fully materialize?
Economic indicators have been underwhelming lately, with disappointments from a wide variety of figures: retail sales, industrial output, you name it. However, when it comes to the things that matter: inflation and jobs, the numbers have been solid.
And what about the combination of both? Inflation in wages? Well, evidence has been mixed so far, but when we see statements like these, speculation is mounting.
The FOMC is expected to remove the word “patience” from the statement regarding the timing of the interest rate hikes, giving it more flexibility and paving the way for a potential rate hike in June.
Chief Analyst at FXStreet Valeria Bednarik and I will be covering the Fed decision on Wednesday, March 18th, from 17:45 GMT. It will be broadcast live on Forex Crunch and on FXStreet.
Here is our trailer:
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