The US economy is positive, but it is gloomy in Europe

As the US labor market cools, the US Federal Reserve has more room to maintain current monetary policy. There appears to be room now to avoid further interest rate hikes in December.

Last month, the U.S. added just 150,000 jobs, less than economists had expected. Meanwhile, unemployment in the U.S. rose to 3.9 percent and wages rose less than expected. “Good news for the central bank,” Wells Fargo & Co chief economist Jay Bryson told Reuters.

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Still unimpressed by the Federal Reserve figures. Thomas Parkin, president of the Federal Reserve Bank of Richmond, said that while the jobs report was a welcome sign that the labor market is stabilizing, his view on whether to raise rates again depends on the path of inflation. However, the central bank last Wednesday was confident of keeping interest rates on hold.

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While the Federal Reserve’s outlook is positive, the situation in Europe is different. Isabelle Schnabel, a member of the German board of the European Central Bank, is still not convinced. After a long period of high inflation, the outlook remains weak and new shocks may threaten price stability in the medium term. It also means we cannot close the door to further interest rate hikes,” the director said. Last week the ECB left interest rates unchanged at 4 percent, an all-time high, but that was not enough.

The goal is still far away

Schnabel points out that the 2 percent inflation target is still a long way off and that it could take another two years for the euro zone to reach that level. He said the final leg of the long-distance race to bring inflation down to the desired level would be “tough” and “slow and bumpy”. ‘The inflation target is now within reach. But don’t really celebrate until you finish the last kilometer,” Schnabel said.