Fed’s hawkish pivot includes bullish view of US job market

Fed officials expected a participation rebound would happen fast this time. So far it hasn’t.

WASHINGTON: It took an unemployment rate nosediving below 4%, years into the last United States economic recovery, to raise the country’s labour force participation rate, and Federal Reserve (Fed) officials are banking on a similar response in new projections that couple a renewed fight against inflation with a historic run of low joblessness.

It’s an outlook that has struck some analysts as contradictory – unemployment sitting at 3.5% for several years might be expected to raise price pressures – but it is consistent with recent research showing a long lag between rising employment and an eventual increase in labour supply and participation rates.