The labor market also remains hot, another factor that’s influencing the Fed’s outlook on rate increases. While job openings have declined slightly, the unemployment rate inched lower in September and hiring is still robust. That will likely encourage the Fed to keep tightening until the labor market shows more signs of slowing down, Bank of America analysts said.
“For us to get to a point where labor market conditions are more fundamentally consistent with the Fed’s inflation target, we think will probably take us to end of next year. So hence, that’s why we expect a pivot really only in Q4 2023,” Wang added.
