Wages play key role in inflation rate hike debate

U.S. labor markets are growing, and unemployment is declining, but before economists with the Federal Reserve determine whether and when to raise interest rates, they’ll need to take a closer look at wage growth and the number of hours worked, Fox Business reports.

August pushed wages up 2.1 percent compared to the same month in 2013, but that is still well below the 3 percent to 3.5 percent rate the Fed would like to see to keep inflation at its target rate of 2 percent. By comparison, wages grew by 1.5 percent between 2009 and 2013.

One national analyst said wage growth is the most important factor to watch over the next six months as the Fed decides when and how to raise rates. One expert said how rates are raised – their upward trajectory – is much more important than when the Federal Reserve begins to raise rates.

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