With the dawn of the second quarter, we look back on the first and wonder if the Federal Reserve will deliver a similar performance on the matter of interest rates.
In the first quarter, there were two FOMC meetings and two 25-basis-point rate hikes. There are two scheduled FOMC meetings in the second quarter. In the first quarter, employment continued to hum along, arguably in stronger doses than the Fed expected. The trend was but one among many, although it played no trivial role in convincing the newly minted Fed chairman to lead the central bank into two more rounds of tightening, or so one could argue.
Indeed, weekly initial claims for jobless benefits posted a sharp drop in the first quarter, falling by 45% through the week ended March 25 from the close of 2005, according to numbers from the Labor Department, as the graph below illustrates. Currently, initial jobless claims are running near the lows of the last two years.
