Three indicators that FRB focuses on, not easily improved
What the Fed is prioritizing now is inflation indicators.
Ultimately, the goal is for the PCE deflator growth rate to stay at or below 2%, but the three major indicators that will determine monetary policy (how far to continue raising rates) until we get there are the following three.
(1) Job openings rate (the ratio of job openings to the number of unemployed)
Powell has repeatedly mentioned this in speeches and press conferences.
In the United States, this is an indicator that has not appeared before.
Recently, it has started to appear in articles in newspapers like Nikkei.
Yesterday, the June job openings data was released.
It stood at 10.698 million. A decline for three consecutive months, the lowest level since last September.
The ratio of job openings to unemployed is about 1.8, slightly down from May, but demand for workers remains strong.
This indicates a tight labor market, which is driving wage growth pressures. That, in turn, implies wage-cost-push inflation. The Fed would likely want to keep this under control to around 1.2 times (multiples).
The second indicator is,
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