WSJ reporter Nick Timiraos says the July jobs report will be hard for the Fed to interpret. Fresh evidence that the labor market isn't reaccelerating could weaken the urgency of another rate hike next month, but that still depends on better inflation data. A cooler inflation report would strengthen the case to hold rates steady, while hot data would open the door for dissenting officials to push for a fourth hike.
WSJ reporter Nick Timiraos says the July jobs report will be a difficult data point for the Federal Reserve to read. Fresh evidence that the labor market has not reaccelerated could dull the urgency of another rate increase next month, though that still hinges on better inflation data.
A falling unemployment rate will keep market attention fixed on inflation figures. Whether price pressures rise or fall will determine if more officials conclude they cannot keep defending their inflation forecasts while holding rates steady.
A benign inflation report would strengthen the case for staying on hold, as two consecutive months of soft data begin to look like a trend rather than noise. Strong data, by contrast, would reopen questions about the projections and give dissenting officials an opening to court a fourth vote for a hike.
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