Service-industry jobs will likely need to weaken further for the Federal Reserve to bring inflation back to its 2% target, Chair Jerome Powell said.
The main drivers of inflation after the pandemic have shown signs of easing in recent months, as supply chains for goods have gradually returned to normal and interest-rate increases have cooled the housing market. But strong employment has fueled prices for other services.
“We see only the earliest signs of disinflation there,” Powell said a press conference Wednesday. “There has been some loosening of labor-market conditions. We need to see that continue.”