Fed notes high US job rate but leaves interest rates steady

The US Federal Reserve decided to leave short-term interest rates where they are, leading to brief signs of life across stock markets.

Although the Fed confirms it will probably lift interest rates soon, following its two-day meeting, that won’t be until June. Both overall and core inflation have moved close to 2%, the Fed’s statement says.

Consumer prices rose 2% in March from a year earlier, according to the Fed, after a year in which inflation softened. So-called core prices, which exclude the food and energy sectors, rose 1.9% in March, up from 1.6% in February.

“Inflation on a 12-month basis is expected to run near the committee’s symmetric 2% objective over the medium term,” the statement says. The minutes from the meeting suggest the inflation upturn was expected and “wouldn’t change the projected path for the federal-funds rate.”

The Fed cites the lowest unemployment level in 18 years as one reason it feels confident about lifting interest rates at least one more time this year.

Hiring at US private employers grew more than expected in April, according to payroll processor Automatic Data Processing. A fresh 204,000 workers were added to the economy last month, exceeding the 190,000 jobs the data expected to see.

April marks the sixth straight month of job growth at 200,000 or more, the report says. The March figure was revised down to 228,000 from 241,000. The job growth came from across industries, with the high-skilled professional and business services industry accounting for more than half of all jobs added.

The Dow Jones Industrial Average slipped 31 points, or 0.1%, to 24068. The S&P 500 declined 0.2%, and the Nasdaq Composite added 0.1%.

The WSJ Dollar Index, which had its best month in April since November 2016, rose 0.1%. The yield on the benchmark 10-year US Treasury note dipped to 2.964%, from 2.976%.

Following the Fed announcement, gold rose by 0.4% to $US1308.70 and West Texas Intermediate crude gained 1.1% to $US67.99 per barrel, the largest gain in two weeks.

Iran questions
The US and European countries are divided in their response to Israeli Prime Minister Benjamin Netanyahu’s speech on Monday about alleged cheating by Iran on its nuclear programme.

European powers say Mr Netanyahu’s revelations reinforce the need for the robust inspection and verification regime outlined in the 2015 Iran nuclear deal.

“They don’t want the world to know what I showed the world yesterday,” Mr Netanyahu says, defending his claims on Iran’s nuclear ambitions, adding “nobody is seeking that kind of development” in response to questions about whether Israel would be prepared to go to war with Iran.

“The problem is the deal was made on a completely false pretence,” White House press secretary Sarah Huckabee Sanders told reporters, stating that Mr Netanyahu’s presentation showed “Iran’s nuclear capabilities were far more advanced and further along than they indicated” at the time the agreement was negotiated.

US president Donald Trump has set a self-imposed May 12 deadline to decide whether to reinstate sanctions on Iran, which were lifted as part of the 2015 deal.

“Every detail Mr Netanyahu presented yesterday was every reason the world came together to apply years of sanctions and negotiate the Iran agreement,” the former secretary of state John Kerry said in a message on Twitter, arguing the Obama-era agreement stopped a threat that was “real.”

“I don’t know what the US president will decide May 12,” French President Emmanuel Macron says, noting that “whatever the decision will be, we will have to prepare such a broader negotiation … because I think nobody wants a war in the region.”

Possible Trump subpoena
FBI special counsel Robert Mueller told Mr Trump’s legal team he could issue a subpoena for the president to appear before a grand jury if he declined to talk with federal investigators, according to four people familiar with a March 5 meeting between the FBI team and Mr Trump’s lawyers, with two of the sources saying that the president’s lead lawyer John Dowd reacted strongly to the warning, telling Mr Mueller that “you are screwing with the work of the president of the United States.”

“So disgraceful that the questions concerning the Russian Witch Hunt were ‘leaked’ to the media,” Mr Trump wrote on Twitter, responding to a report in the New York Times that revealed over 40 questions that Mr Mueller would want to ask the president.

Sources close to the president say it is increasingly unlikely Mr Trump will sit down for a voluntary interview with the special counsel.