Latest Jobs Report Shows Labor Market Is Not a Source of Inflationary Pressure

Kevin M.Warsh made one thing abundantly clear in his first weeks as chairman of the Federal Reserve.

With inflation running for five years above the central bank’s 2 percent target, the Fed would put achieving price stability over just about everything else.A steady labor market gives Mr.Warsh the space to do so, with data released on Thursday reinforcing the notion that wage pressures are not the primary driver of inflation right now.The unemployment rate ticked down to 4.2 percent in June as more people left the labor force.

Average hourly earnings stayed relatively muted, rising 0.3 percent for the month or 3.5 percent compared with the same time last year.The increases have been more than offset by the acceleration in inflation in recent months.Since April, consumer prices have risen at the fastest pace in three years, reflecting a surge in energy costs caused by the war with Iran and a run-up in prices related to the boom in artificial intelligence.

In recent weeks, however, oil prices, and those for gasoline, shipping and other categories, have fallen sharply as signs emerged of a deal to end the conflict.If that agreement holds, it’s possible that the worst of the recent inflation shock might soon be over.Speaking on Wednesday, Mr.

Warsh noted that inflation risks had moderated in recent weeks.“Expectations of inflation over the first four weeks of this period, they’ve come down.Inflation risks have come down,” Mr.

Warsh said at the European Central Bank’s annual gathering of international policymakers and economists in Sintra, Portugal.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access.If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe....