Free Trial

Rates Vs Unemp Projections To Tell Story Of "Soft Landing" Narrative

MNI is pencilling in the following for the September economic projections – reflecting weaker growth and higher inflation (especially in 2022-23), with the unemployment rate picking up further from historically low levels.
  • The basic idea is the FOMC has recognized that in order to get inflation back down to target, it's necessary to tighten policy to the point that the labor market loosens.
  • The degree to which the Fed is comfortable seeing unemployment rates rise as policy tightens is going to be one of the key questions today. The table below shows an unemp rate at the high end of expectations, based on sell-side notes we have seen.
  • If the unemployment numbers in the table don't pick up significantly, it may suggest that the FOMC is still clinging to its "soft landing" narrative a little too closely. If the unemployment rate is very high, say nearing 5%, it would be hawkish as it shows the Fed is prepared to keep tightening in the face of rising joblessness.

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.