January’s strong jobs report will make Fed’s inflation battle harder

The figures were more than double economists’ estimates for 188,000 new jobs, and well above December’s gain of 260,000. On top of that, revisions to last year’s jobs data revealed employers added roughly 311,000 more jobs than previously estimated during the year.

While the job’s gains are great news for the economy as a whole, for the Federal Reserve—which has been trying to quash inflation with interest rate hikes for nearly a year—they could be another roadblock in its war to lower inflation.

“Job creation in January was eye-popping,” said BMO Wealth Management’s chief investment strategist Yung-Yu Ma. “Unless this labor market strength turns out to be a one-month blip…the Fed is likely to dig in and keep rates higher for longer.”

In order to cool the economy, Fed officials have raised interest rates eight times since March of last year. And in December, the evidence of their work started to show when year-over-year inflation, as measured by the consumer price index, fell to 6.5%—from 9.1% at its June peak. But Ronald Temple, chief market strategist at the asset manager Lazard, told Fortune that the latest jobs report shows that the “inflation battle is far from over.”

“The labor market is extremely tight,” he said. “The clear takeaway for the Fed should be that financial conditions remain too loose to ensure inflation will return to the 2% target.”

Is good news still bad news for markets?

For investors, a strong labor market is typically good news, but over the past year, it’s been a different story. 

With the Fed attempting to slow the economy to fight inflation, every time investors received positive news about…