The U.S. jobs market is hot almost any way you look at it, Federal Reserve Chairwoman Janet Yellen said Wednesday in explaining the central bank’s decision to raise interest rates despite slowing inflation.
With the unemployment rate dropping, it’s a “prudent move” to raise interest rates, even though inflation is falling, Yellen said at a press conference following the two-day Fed meeting in Washington.
The Fed, she said, is not tightening monetary policy so quickly “as to put a brake” on continued job gains. Even though job growth has slowed recently, it has remained strong enough to keep up with population growth and to send unemployment lower, despite the Fed’s rate hikes.
The reassuring evidence comes from “not only…the unemployment rate, but I think any indicator of labor market performance and tightness that you could look at,” Yellen said.
At 4.3 percent, the unemployment rate is currently the lowest is has been since 2001. But Yellen also cited household perceptions of the availability of jobs, the difficulty that businesses face finding workers, the rate at which workers are quitting their jobs, and the number of job openings, which are at the highest level on record.
“All of these indicators do signal a tight labor market,” Yellen said.
It’s good that the labor market is tight, she added, and that workers have better prospects than they did during the recession.
Nevertheless, she explained, “we want to keep the expansion on a sustainable path,” and not allow the market to get too hot and spark runaway inflation, forcing the Fed to react with rapid interest rate increases that could send the economy into a recession.
