Jobs Market Roars Back as Inflation Report Looms

The US jobs market is showing signs of strength after a recent slowdown, and this week's inflation report may be the final piece of evidence needed to push interest rates higher. The Federal Reserve's new chair has taken a firmly hawkish tone, stressing that getting inflation back down to its 2% target remains a priority.

The latest jobs report showed that the economy added a forecast-smashing 162,000 jobs in August, with the Labor Department also revising earlier months' figures upward. This suggests that the labor market is more resilient than previously thought and could handle higher interest rates.

Inflation has been stubborn, however, with consumer prices rising 3.4% year-over-year in July, while the personal consumption expenditures index was even higher at 3.7%. Friday's inflation report will provide a crucial update on whether price pressures are still building.