US jobs bonanza all but ensures Fed rate hike in June

WASHINGTON, June 10 (AFP): The US Federal Reserve this week will raise the key interest rate for the second time in 2018.

It is working to stay one step ahead of inflation.

A hiring spree in May helped drive the unemployment rate down to levels eerily similar to those recorded almost five decades ago.

Fifty years ago was an era just before the high inflation began, and the economic pain that many Americans still recall with a shudder.

It took years of high lending rates for the Fed to rein in prices and see growth restored in the world's largest economy.

The central bank since has been focused on avoiding a repeat.

Even before last month's expectations-shattering jobs report, members of the Federal Reserve's interest rate-setting Federal Open Market Committee had signaled they were ready to move.

According to the May job report, 223,000 net new positions were created and unemployment hit the lowest in 18 years at 3.8 per cent.

Fed Governor Lael Brainard, an influential voice who spent much of 2017 urging fellow policymakers to wait before raising rates, has sounded somewhat more hawkish of late.

She recently said gradual rate increases are now justified and downplayed worries possible signs in financial markets of trouble ahead for the economy.