WASHINGTON (AP) — Worker pay isn't rising fast enough to push up inflation, Federal Reserve Chairman Jerome Powell says, even with the unemployment rate near a five-decade low. Little inflation pressure makes it easier for the Fed to cut short-term interest rates.
"We don't have any basis, or any evidence, for calling this a hot labor market," Powell says during testimony before the House Financial Services Committee. "To call something hot you need to see some heat."
Powell acknowledges that many businesses complain they cannot find enough workers to fill their open jobs. But he adds that average hourly pay, which grew 3.1% in June from a year earlier, is rising more slowly than it has in previous expansions. That is a sign that companies could raise pay further to attract workers.