Fed has to factor in reality behind job data

THINGS seem to be really looking good. The US unemployment rate fell to 5.4 per cent in April, from 5.5 per cent in the previous month, a seven-year low, and the American economy added 223,000 jobs in that month, the 55th straight month of employment gains in the US. That would indicate that the labour markets are recovering, and creating the environment in which the US Federal Reserve could finally feel comfortable enough to move in the direction of raising interest rates.

The Fed lowered them to near zero in December 2008 during the global financial crisis and the conventional wisdom has been that it was planning to raise them now for the first time in a decade.

Indeed, earlier expectations were that the US central bank would start raising interest rates in the middle of this year, possibly as early as its June meeting.