What is the future of the U.S. monetary policy?

Since Ben Bernanke’s speech from June 19th, which linked the tapering of QE3 as well as the Fed’s interest rate hike with the U.S. unemployment rate, the U.S. labor market statistics had increasingly important indications of the future U.S. monetary policy.

Recently, financial metrics in the U.S. have shown steady improvement, including the labor market data published last week, which was hoped to provide clearer signs for QE3’s tapering and rate hikes.

On Thursday, initial data on the total amount of jobs in the U.S. labor market came in the form of the ADP’s National Employment Report, which presented a seasonally adjusted increase of only 176K jobs in August versus 200K in July.

What is the future of the U.S. monetary policy

What is the future of the U.S. monetary policy

On the other hand, news of the opposite spirit were provided by the U.S. department of labor, whose Initial Jobless Claims report suggested only 323K new claims were made during the previous week.

On Friday, the Change in Non-farm Payrolls report suggested that 169K jobs were created in August, which is more than July’s 162K, but less than analyst consensus which predicted 180K.

However, the most impressive figure was Unemployment rate, which dropped to 7.3%, pushing forward to the 6.5% threshold set by Bernanke as a necessary condition for raising interest rates in his aforementioned speech.

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