The majority of top Federal Reserve (Fed) policymakers believe that interest rates will have to continue to rise until the economy slows down from the increased cost of borrowing, according to the minutes of the central bank’s September monetary policy meeting. Just how long monetary policy will remain restrictive is an open question, the minutes showed.

Furthermore, the minutes make no mention of any discussion of President Donald Trump’s demands that the Fed should stop raising interest rates. The minutes also said that members judged that information received since the last Fed meeting in August indicated that the labour market had continued to strengthen and that economic activity had been rising at a strong rate.

In the meantime, unemployment in the UK fell by 47,000 to 1.36 million in the three months to August, official data released last week showed. Meanwhile the jobless rate remained at four per cent, the lowest levels since 1975.

In the meantime, pay rose by 3.1 per cent in the three months to August, compared to the same period last year, while inflation for the same period stood at 2.5 per cent. Before the financial crisis, the average rate of wage growth was four per cent. David Freeman, the Office for National Statistics’s head of labour market, said: “People’s regular monthly wage packets grew at their strongest rate in almost a decade, but, allowing for inflation, the growth was much more subdued. Economists have been puzzled why wage growth has been stagnant even as unemployment has fallen sharply.

Finally, latest data from Eurostat showed that eurozone consumer price inflation quickened in September to exceed the European Central Bank’s (ECB) target of ‘below, but close to two per cent’. The consumer price index (CPI) rose by 2.1 per cent year-on-year in September, following a two per cent increase in previous month.

In July, inflation in the currency bloc stood at 2.1 per cent. Core inflation, which outstrips food, energy, alcohol and tobacco, declined slightly to 0.9 per cent in September, after August’s reading of one per cent. Compared to the previous month, the CPI rose 0.5 per cent in September.

The ECB meets next week and is expected to keep interest rates on hold.

This report was compiled by Bank of Valletta for general information purposes only.