The Federal Reserve is concerned about a sharp increase in US unemployment rates

Last week, Federal Reserve Chairman Jerome Powell's unexpected remarks injected a shot in the arm for the markets, propelling a simultaneous rise in U.S. stocks, bonds, and currency. Apart from being interpreted as a potential further relaxation of the financial environment, his speech also touched on the unemployment rate.

During last Wednesday's press conference, Powell suggested that a significant increase in the unemployment rate might prompt the Federal Reserve to lower interest rates, reiterating this viewpoint several times in response to journalists' questions.

He emphasized that although the Federal Reserve aims to lower rates only after ensuring control over inflation, there might also be a need for policy measures to address unexpected weakness in the job market. Despite not currently witnessing any evident issues in the job market, some economists are not overly optimistic. They believe that the unemployment rates in some states have risen significantly, with both the number and duration of temporary jobs decreasing.

However, Powell also added that with the "initial claims for unemployment benefits" being exceptionally low, he does not foresee the risk of unemployment rates rising rapidly.

Meanwhile, in the latest Federal Reserve policy meeting, officials maintained interest rates unchanged and released new quarterly economic forecasts. They anticipate a 2.1% growth rate for the U.S. economy this year, significantly higher than the 1.4% forecasted in December. Despite recent months seeing higher-than-expected inflation rates, a slim majority of Federal Reserve officials still anticipate three interest rate cuts this year, leading to another surge in the U.S. stock market.

These actions indicate that despite the strong performance of the U.S. economy, concerns over the job market and inflation control remain paramount for the Federal Reserve. They aim to maintain stable economic growth through timely policy interventions while ensuring that inflation stays within manageable bounds.

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