Home Economy News U.S. job market data bolsters Fed’s ‘no rush’ rate cut view

U.S. job market data bolsters Fed’s ‘no rush’ rate cut view


U.S. job market data bolsters Fed’s ‘no rush’ rate cut view By Reuters

Breaking News



Published Mar 08, 2024 10:19AM ET
Updated Mar 09, 2024 01:15AM ET

© Reuters. FILE PHOTO: Early summer storm clouds gather over the U.S. Federal Reserve Building before an evening thunderstorm in Washington June 9, 2006. REUTERS/Jim Bourg/File Photo

By Ann Saphir and Howard Schneider

(Reuters) -Federal Reserve policymakers weighing when to start interest-rate cuts got fresh reasons on Friday to remain on standby, after a government report showed robust job growth in February but also signs of labor market cooling that could help the Fed’s battle with inflation.

U.S. employers added 275,000 jobs last month, a Labor Department report showed on Friday, handily beating the 200,000 that economists expected.

But the report’s revisions of prior months’ estimates showed smaller job gains in January and December than had earlier been thought, and other details of the report suggested a rebalancing in the labor market continues.

The U.S. unemployment rate rose to 3.9%, its highest in two years, though still below levels the Fed sees as sustainable in the long-run.

And wage growth has continued to edge down, rising 4.3% in February from a year earlier, down from 4.4% in January. Fed policymakers won’t see that growth as consistent yet with their 2% inflation goal, but it is moving in the right direction.

In testimony on Capitol Hill this week, Fed Chair Jerome Powell said he feels the economy is healthy and policymakers are “not far” from having enough confidence on inflation’s downward direction to start reducing interest rates.

Friday’s report showing the labor market is still strong but easing slowly “will provide reassurance to the Fed that real economic conditions remain broadly consistent with inflation converging durably towards 2%, and it will be appropriate to cut by June,” said Evercore ISI’s Krishna Guha.

Futures contracts that settle to the Fed policy rate now point to about an 80% chance the Fed will start cutting interest-rates by mid-June, with a little more than a one-in-four chance of a May 1 start.

Traders firmed up their expectations for a full percentage point of rate cuts by the end of the year, the equivalent of four quarter-point reductions over the remaining seven Fed policy-setting meetings this year.


Fed policymakers next meet March 19-20, and are nearly universally expected to keep the policy rate in the current 5.25%-5.5% range, where it has been since last July. Powell said this week that range is likely to be the peak and is putting downward pressure on price pressures.

With inflation by the Fed’s targeted measure, at 2.4%, still above the Fed’s 2% goal, policymakers are looking for further assurance that it is headed durably downward before they decide to cut rates.

Instead, since the start of they year, some readings on inflation have been stronger than expected, prompting some Fed policymakers to say they may need to delay rate cuts a bit longer.

Fed Governor Christopher Waller, whose takes on monetary policy have proven prescient over the past couple of years, said in February that he wants a couple more months of data to verify progress on inflation, and that strong job gains underscore there is “no rush” to cut rates.

Meanwhile policymakers continue to look for any signals the labor market is cracking under the pressure of the highest U.S. policy rate in decades. Analysts said they won’t find much in Friday’s jobs report.

“It is clear that the pace of hiring is cooling, which was to have been expected,” wrote Regions Financial Corp (NYSE:RF) Chief Economist Richard Moody. “There is, however, nothing in the data, including the higher jobless rate, that tells us the labor market is on the verge of rolling over.”

U.S. job market data bolsters Fed’s ‘no rush’ rate cut view

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News