Atlanta Fed President says the improvement in jobs could result in higher interest rates

Per Reuters

The Fed previously cut down rates after fear of a recession, which was the main concern of firms and financial analysts. Now, Atlanta Fed President Raphael Bostic said that the improved jobs could increase the possibility of higher interest rates.

This comes at a time when the Nasdaq and the S&P 500 experienced their best January ever since 2001 and 2019, respectively. The positive January was a sight for sore eyes, especially since there was a lot of red activity throughout 2022.

According to the Dow Jones Market Data, Nasdaq reported a 10.7% increase in January, the best it had so far since 2001. This makes January 2023 Nasdaq's best-performing January in 22 years.

The S&P 500, on the other hand, reported a 6.2% gain, with stocks like General Motors rising by 8.4% after announcing its earnings. This was the S&P 500's best-performing January since 2019, four years ago.

Bostic shares that his base case for rates is in line with policymakers' median forecasts at 5.1%, per Bloomberg. This came as 517,000 new jobs were added in January, which resulted in the lowest unemployment in over 50 years.

Unemployment dropped to just 3.4%, the lowest since 1969. Bostic shared that should the economy persist, the Feds would have to do more work.

Bostic: "...I would expect that that would translate into us raising interest rates more than I have projected right now.”

The news comes as US President Joe Biden says that the risk of recession in the United States is very low. Biden also highlighted how progress was being made to bring inflation down.

The US President shared how his plan was coming into effect, with results now showing. This was a statement change compared to what he said in October, noting a recession would be felt, but it would only be "very slight."

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Other News:

• Nasdaq and S&P 500 Get Best January Since 2001 and 2019, Respectively
• Biden has said that the risk of a recession in the US is very low

Resources:

Reuters

Bloomberg