Everyday Economics: The Fed takes center stage this week

The Federal Reserve’s job is straightforward to state and difficult to deliver: maximum employment, low and stable inflation, and a financial system capable of supporting both. Congress formally describes the first two as the Fed’s dual mandate. Financial stability is the foundation underneath it.

For much of the past year, the labor market looked like the greater risk. Hiring had slowed sharply, raising fears that a low-hire, low-fire economy could tip into outright job losses.

That has not happened.

Employers added only 57,000 jobs in June, but unemployment held at 4.2%. The hiring rate remained weak at 3.3% in May, yet layoffs were also low. The Fed’s June meeting minutes described the labor market as broadly balanced, while initial unemployment claims have since fallen to their lowest level in decades.That stability shifts the Fed’s attention to the other side of its mandate: inflation.June’s consumer-price report was encouraging. Headline prices fell 0.4% from May, while core prices were unchanged and slowed to 2.6% over the year. But the relie...