30 Jan 2015
US wages data tonight key for a rate hike signal – ANZ
FXStreet (Barcelona) - The Research Team at ANZ notes that the Q4 US employment cost index (ECI) published tonight will be a critical piece of data in determining the timeframe for which the Fed can remain patient.
Key Quotes
“The US labour market has improved dramatically since the GFC, with the unemployment rate down from 10.0% to 5.6%, and jobless claims running at a 15-year low. But we have yet to see a meaningful uplift in wages, which most view as a crucial ingredient for the recovery in consumption to be self-sustaining.”
“At present, there are mixed signals – average hourly earnings suggest there are few signs of wage pressures and that the Fed can be patient, but on the other hand the ECI suggests that the Fed has less time.”
“A solid lift in the ECI would be consistent with a Fed start to tightening by Q2, while a soft reading would provide the Fed with a bit more time. This is especially the case given the most recent FOMC statement acknowledged that the global disinflationary dynamics might result in inflation being weaker than expected in the near term and take longer to move back to its 2% target.”
Key Quotes
“The US labour market has improved dramatically since the GFC, with the unemployment rate down from 10.0% to 5.6%, and jobless claims running at a 15-year low. But we have yet to see a meaningful uplift in wages, which most view as a crucial ingredient for the recovery in consumption to be self-sustaining.”
“At present, there are mixed signals – average hourly earnings suggest there are few signs of wage pressures and that the Fed can be patient, but on the other hand the ECI suggests that the Fed has less time.”
“A solid lift in the ECI would be consistent with a Fed start to tightening by Q2, while a soft reading would provide the Fed with a bit more time. This is especially the case given the most recent FOMC statement acknowledged that the global disinflationary dynamics might result in inflation being weaker than expected in the near term and take longer to move back to its 2% target.”