Smaller Rate Hikes Are Likely Coming in December

Seattle, Portland, San Francisco

2022/12/07

The Federal Reserve could pull back on the pace of its aggressive rate hikes in December. Fed officials have ramped up their rhetoric to disseminate the message that there’s much more work to do and will forge ahead with rate increases. Despite that aggressive action, which would normally impact the labor market, the job landscape has so far remained resilient. After many people were thrown out of work at the start of the pandemic, the economy has since regained all lost jobs, adding hundreds positions each month. However, the tight labor market puts the Fed in a tricky position, since a shortage of staff means employees can essentially name their price, adding to inflationary pressures.