Pay and benefits for America’s workers grew in the final three months of last year at the slowest pace in two and a half years, a trend that could affect the Federal Reserve’s decision about when to begin cutting interest rates.

Compensation as measured by the government’s Employment Cost Index rose 0.9% in the October-December quarter, down from a 1.1% increase in the previous quarter, the Labor Department said Wednesday. Compared with the same quarter a year earlier, compensation growth slowed to 4.2% from 4.3%. …

Since the pandemic, wages on average have grown at a historically rapid pace, before adjusting for inflation. Many companies have had to offer much higher pay to attract and keep workers. Yet hiring has moderated in recent months, to levels closer those that prevailed before the pandemic. The more modest job gains have reduced pressure on companies to offer big pay gains.

[A few points should be noted here. First off, *real* wage growth (inflation adjusted) have declined through most of Biden’s presidency, as wage growth fell behind inflation in nearly every quarter so far. Hiring accelerated the first two years because the economy was replacing the jobs destroyed by the pandemic shutdowns, and have “moderated” after catching up to normal a year ago or so. The slowdown of inflation still leaves it at too-high levels, and the lack of real sustained growth means wages are still trailing inflation. — Ed]