Business
U.S. Federal Reserve delivers small interest rate hike, signals a ‘couple’ more increases necessary to tackle inflation
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Federal Reserve chair Jerome Powell speaks during a news conference at the Federal Reserve Board in Washington on Feb. 1.Jacquelyn Martin/The Associated Press
The U.S. Federal Reserve increased its benchmark interest rate by a quarter percentage point on Wednesday and signalled that a “couple” more rate hikes are still needed to bring inflation under control.
The widely anticipated announcement lifted the federal funds rate to a range of 4.5 per cent to 4.75 per cent. The quarter-point move is the smallest increase since the central bank began ratcheting up borrowing costs last spring in an effort to curb surging prices.
After a string of oversized rate hikes, the U.S. economy has begun to slow and inflation is showing signs of easing. Fed chair Jerome Powell said on Wednesday that “the disinflationary process has started,” although he warned that it would be “very premature to declare victory.”
“While recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a sustained downward path,” he said in a news conference after the rate announcement.
While the Fed was unambiguous that “ongoing increases” in borrowing costs are still necessary, financial markets responded positively to Mr. Powell’s relatively optimistic comments about inflation and the U.S. economy.
The S&P 500 finished the trading day up 1.05 per cent, while the Nasdaq Composite surged 2 per cent. Bond markets also rallied, with the yield on two-year U.S. government bonds falling around 0.1 per cent. Bond prices and yields move in opposite directions.
“While previous statements said the Fed would have to determine the pace of future rate rises, today’s statement indicated it will now have to determine their extent,” Desjardins economist Francis Généreux wrote in a note to clients. “Rate hikes aren’t over, but it may be the beginning of the end.”
Members of the Federal Open Market Committee, the Fed’s highest decision-making body, which sets U.S. monetary policy, signalled in December that they expect the fed funds rate to exceed 5 per cent by the end of the year. That would imply at least two more quarter-point hikes.
Mr. Powell reiterated this forecast, although he said future rate hikes would be conditional on incoming economic data. He also pushed back against market expectations that the Fed could start cutting interest rates this year. Interest-rate-swap contracts are pricing at least two rate cuts before the end of 2023.
“The historical record cautions strongly against prematurely loosening policy. We will stay the course, until the job is done,” Mr. Powell said.
The Fed’s insistence that more rate hikes are still needed puts it on a different trajectory than the Bank of Canada.
Last week, Canada’s central bank increased its benchmark rate to 4.5 per cent, but said it expects to hold off further rate hikes. This “conditional pause” suggests that Canadian rates have reached a plateau while U.S. rates will keep marching higher.
The Canadian economy is generally seen as being more sensitive to interest rates than the U.S. economy, given how much of the Canadian economy relies on the housing sector. Canadian mortgages also tend to have five-year terms, compared with 30-year terms in the United States, making homeowners more susceptible to rate increases.
What happens next to U.S. interest rates will depend on the trajectory of inflation as well as the strength of the country’s labour market.
There are plenty of signs that inflation is trending in the right direction. The annual rate of consumer price index inflation in the U.S. was 6.5 per cent in December, down from a 40-year high of 9.1 per cent in June.
Prices for many goods, such as used vehicles, have fallen in recent months, as supply chains have improved and consumer demand has shifted back toward services. Mr. Powell said he also expects housing-related inflation to diminish in the coming months.
The challenge is service prices, excluding housing, which show few signs of decelerating. This is tied in part to rapid wage growth, which is being driven by the ultralow levels of unemployment, which stood at a record low 3.5 per cent in December.
Mr. Powell said unemployment will likely need to rise to slow the pace of service price growth. He expects this to happen in the coming quarters as higher rates work to slow the economy. Although, he suggested that a soft landing was still possible.
“There’s a path to getting inflation back down to 2 per cent without a really significant economic decline or a significant increase in unemployment,” he said.
The European Central Bank and the Bank of England will announce their latest interest-rate decisions on Thursday. The central banks are behind the Bank of Canada and the Fed when it comes to tightening monetary policy, and both are expected to announce further half-point rate increases.
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When job seekers complain about being ghosted—a form of silent rejection where candidates hear nothing after submitting an application or having been interviewed—I wonder if they’re unaware of the changes in social norms and mannerisms. Do they not know that social norms and the workplace are intertwined? Since the advent of social media, manners, courtesy, and empathy have significantly diminished.
If there’s one thing job seekers can be certain about, they’ll be ghosted multiple times throughout their job search. It wouldn’t be a stretch to say ghosting candidates has become a norm. It’s worth pointing out that companies don’t ghost candidates; the company’s employees ghost candidates. When the recruiter or hiring manager is of a generation that finds ghosting an acceptable way to terminate a relationship, romantic or otherwise, it shouldn’t come as a surprise when they ghost candidates.
Bad News: You can’t change or control other people’s behaviour.
Good News: You can take proactive steps to minimize—as with all human interactions, there are no guarantees—the chances of being ghosted.
Build a strong relationship. Focus on being likeable.
Understandably, hiring managers—recruiters less so since they won’t be working with the candidate—look to hire candidates they can envision getting along with; hence, most job seekers would significantly boost their chance of job search success by focusing more on being likable.
By likable, I mean being pleasant, respectful, and expressing genuine interest in the company and the role. I’ve yet to meet a hiring manager who hires candidates they don’t like. As I’ve mentioned in previous columns, likeability supersedes your skills and experience. Most job seekers don’t focus enough on being likeable.
The stronger the relationship (read: bond) you establish with the recruiter or hiring manager, the more likely they won’t ghost you. From your first interaction, focus on creating a rapport beyond just transactional communication.
Personalizing your correspondence can make a significant difference. Use the hiring manager’s name instead of a generic ‘To Whom It May Concern.’ Find commonalities such as place of birth, hobbies, schools attended, associations you belong to, favourite restaurants, and people you know.
Avoid appearing confrontational.
Anyone reading this can relate to the number one reason why people ghost: to avoid confrontation. Today, many people feel entitled, resulting in job seekers being frustrated and angry. You only need to scroll through LinkedIn posts and comments to see that bashing employers has become an unproductive trend. Hence, it’s likely that a candidate will become confrontational if told they don’t get the job.
Smile throughout your interview! Avoid appearing desperate! My best interviews have been those in which I was nonchalant; I was indifferent to whether or not I got the job. In addition to being a turn-off, showing signs of desperation will raise questions about how you’ll react if told you don’t get hired.
Lastly, tell your interviewer how much you enjoyed talking with them and that you look forward to hearing back.
- “I really enjoyed our conversation, Khloe. Thank you for taking the time to meet with me. I look forward to hearing your hiring decision.”
- “Either way, please call or email me to let me know about my application status.”
You’re more likely to receive a response by asking explicitly for communication.
Earn your interviewer’s respect.
People tend not to ghost someone they respect.
Respect must be earned, starting with one of life’s golden rules: Treat others how you want to be treated. In other words, give respect to get respect.
Throughout your job search, be professional and courteous. Respond promptly to emails and calls and thank people for their time. Approaching recruiters and hiring managers politely and professionally improves your chances of being treated similarly.
Ask for advice, not feedback.
Asking for advice encourages communication. As your interviewer is wrapping up the interview, mention that you’d welcome their advice. “Given your extensive background in project management, any advice you may have for me wanting to advance my career would be greatly appreciated.”
Why ask for advice and not feedback? The first problem with asking for feedback is it puts the other person on the spot. The second problem is feedback can lead to disagreement, hurt feelings, or defensiveness, a common reaction resulting in confrontation. On the other hand, asking for advice is asking for guidance and suggestions to achieve a better result. Essentially, you’re acknowledging the other person’s experience and massaging their ego. Do you know anyone who doesn’t like being asked for advice?
Send a thank you note.
Sending a thank you note expressing appreciation for the interview and the insights you gained reinforces your interest and keeps the lines of communication open. Conclude with a forward-looking statement, encouraging the recipient to respond.
- “I look forward to hearing from you regarding the next steps.”
- “I look forward to staying in touch.”
Job searching aside, direct, open, and honest communication—say what you mean, mean what you say—which I highly value, has become rare, which explains the prevalence of ghosting. When you’re ghosted, assume the company isn’t enthusiastic about hiring you. Silence may be golden in some things, but ghosting is not one of them.
_____________________________________________________________________
Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.
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