Unemployment Claims Rise as Fed Continues Rate Hikes

Applications for unemployment assistance went up slightly last week, though they remain at historically low levels.

According to statistics released by the Labor Department Thursday, jobless claims in the U.S. rose to 198,000 during the week ending March 25. That’s up some 7,000 claims over the previous week.

The rise comes amid the Federal Reserve’s attempt to slow employment and cool off the economy in its continuing fight against a stubborn inflation rate.

The four-week moving average of claims also rose slightly, climbing by 2,000 to 198,250. The rate remains below the 200,000 threshold for the 10th straight week.

The slight rise comes after  the Federal Reserve last week raised its key interest rate by a quarter-point, despite concerns that higher borrowing rates could worsen the turmoil that has gripped the banking system.

Fed Chair Jerome Powell indicated that the central bank remains focused on fighting high inflation, which could require additional rate hikes.

But he also signaled that the Fed might not need to impose a lengthy string of increases if more banks were to reduce their lending to conserve cash, the Associated Press reported. This could slow the economy, hiring and inflation, Powell said, which could aid the central bank in its push to cool the economy, labor market and wages, thereby suppressing prices. So far, those things have not happened to the degree that the central bank had hoped.

Inflation remains more than double the Fed’s 2% target, and the economy is growing and adding jobs at a healthy clip.

The news comes after the government reported that employers added 311,000 jobs in February, fewer than were added in January’s but enough to keep pressure on the Federal Reserve to raise interest rates aggressively to fight inflation. The unemployment rate rose to 3.6%, from a 53-year low of 3.4%.