By Michael Bright

The U.S. Labor Department has steadily reported that lots of new jobs are being created each week. That’s good news – except for people who are hoping for relief from rising interest rates soon.

The surprising strength of the U.S. economy, measured in part by job creation, likely will mean that the Federal Reserve will not cut interest rates this year. It paused in hiking rates June 14. But it might go on later to raise them by 25 basis points a time or two.

This differs from conventional thinking that the Federal Reserve’s interest rate hikes would be temporary and would be reduced as soon as inflation cooled. The tight labor market has changed that calculation.

Inflation has slowed a bit but remains stubbornly high and is entrenched in people’s psychology. So, the Fed has little choice but to remain vigilant. It likely will keep interest rates at the current plateau – or raise them slightly – to curb the inflation rate.

To borrow an analogy, the patient still needs its regimen of antibiotics to kill the infection of inflation. The illness cannot be cured with a single dose.

What’s more, the Fed probably will keep interest rates relatively high for a while to tame inflation for good. Barring a surprise, Americans will have to become accustomed to rates at around today’s level.

The remarkable surge in new jobs is a testament to the underlying strength and resilience of the U.S. economy and the tightness of the labor market. But one consequence will be higher interest rates than most people would prefer this year and probably longer.