12 Jan 2015
US NFP: Wage inflation figures worst ever for the series - RBS
FXStreet (Bali) - As the FX Strategy Team at RBS reports, released wage inflation figures in the US last Friday were among the worst ever for the series.
Key Quotes
"At her December FOMC press conference, Chair Yellen said the FOMC does not need inflation rates to rise before hiking the Fed Funds rate, but instead needs “a feeling of reasonable confidence that when we start the process of normalizing policy, that it will be moving up over time.” "
"This “reasonable confidence” language was repeated in the December meeting minutes as well and sets the stage for what could be the overarching USD theme over the next several months: Can “reasonable confidence” be achieved without a pickup in current inflation readings?"
"Friday's NFP release was a perfect test subject of the interplay between inflation today and “reasonable confidence” in inflation in the future. The continued outperformance in headline job gains points to a further reduction in labour market slack, and the unemployment rate fell further into the Fed’s estimated range for the neutral Fed Funds rate (NAIRU)."
"But the simultaneously released wage inflation figures were among the worst ever for the series, which seems to stand in stark contrast to the pickup in labour market activity seen over the past year."
Key Quotes
"At her December FOMC press conference, Chair Yellen said the FOMC does not need inflation rates to rise before hiking the Fed Funds rate, but instead needs “a feeling of reasonable confidence that when we start the process of normalizing policy, that it will be moving up over time.” "
"This “reasonable confidence” language was repeated in the December meeting minutes as well and sets the stage for what could be the overarching USD theme over the next several months: Can “reasonable confidence” be achieved without a pickup in current inflation readings?"
"Friday's NFP release was a perfect test subject of the interplay between inflation today and “reasonable confidence” in inflation in the future. The continued outperformance in headline job gains points to a further reduction in labour market slack, and the unemployment rate fell further into the Fed’s estimated range for the neutral Fed Funds rate (NAIRU)."
"But the simultaneously released wage inflation figures were among the worst ever for the series, which seems to stand in stark contrast to the pickup in labour market activity seen over the past year."