The Wall Street Journal (WSJ) reported on the 5th that the Federal Reserve System, the central bank of the United States, is likely to raise interest rates more aggressively than expected next year due to overheating of the labor market.
Overall, inflation is peaking and showing signs of slowing, but the WSJ's diagnosis is that wage pressures remain and it could continue to raise rates higher than investors currently expect.
The fact that the US employment index last month, released on the 2nd, far exceeded market expectations, reinforces this observation.
Nonfarm payrolls increased by more than 30% in November, while average hourly wages soared 0.6% month-on-month, doubling the forecast, further worrying the Fed.
This rise in wages and high inflation in labor-intensive service industries could push the Fed's final rate higher than the 5% currently expected by investors, the newspaper predicted.
At the regular meeting of the Federal Open Market Committee (FOMC) in December, which will be held on the 13th and 14th, a rate hike of 0.5 percentage point is certain, and if the November consumer price index (CPI) scheduled to be announced on the 13th is high, the Fed will The WSJ pointed out that in February, it is possible to take a consecutive big step (a rate hike of 0.5 percentage points at a time).
According to the WSJ, the Fed is expected to slightly raise its base rate forecast for next year from 4.5-5% to 4.75-5.25% in the dot plot (a chart showing the interest rate forecasts of FOMC members) to be released after the FOMC meeting in December.
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