Journal Article

The KC Fed LMCI Momentum Indicator Suggests Monetary Policy Is Beginning to Weigh on Labor Markets

Abstract: The Federal Open Market Committee has been quickly raising the federal funds rate to lower inflation. However, services inflation remains high, supported by a tight labor market with high wage growth. Recent readings in the LMCI momentum indicator suggest monetary policy tightening is beginning to weigh on labor markets, which may eventually lead to lower services inflation and lower inflation overall.

Keywords: Labor Market Conditions Indicators (FRB Kansas City LMCI); monetary policy; labor markets; inflation (finance);

JEL Classification: E52; J4; P24;

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Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Bulletin

Publication Date: 2023-02-03

Issue: February 3rd, 2023

Pages: 4