The Fed's Fight Against Inflation Looks Harder Now
The strong January employment report suggests the central bank will have to raise rates faster and sooner.
The economy appears to have largely weathered the omicron surge unscathed.
Photographer: Olivier Douliery/AFP/Getty Images
If anyone had doubts that the Federal Reserve will start raising interest rates at its next policy-making meeting in March, the latest jobs report should put them to rest. The relevant question now is how much further might the Fed need to go to keep a strong economic recovery from fueling excessive inflation.
Payroll gains in January exceeded even the most optimistic forecasts, suggesting that the economy weathered the surge in the Covid-19 omicron variant largely unscathed and had much more momentum toward the end of last year than previously thought. Nonfarm employers added an estimated 467,000 jobs in January, while upward revisions to earlier months brought the three-month average gain to 541,000 jobs. Treasury yields climbed on the news, and stocks were uneven.