Federal Reserve officials appear poised to cut interest rates this month, with data showing strong job growth in November despite a slowdown in October. The unemployment rate ticked up to 4.2%, but the labor market remains in good shape.
The US added 227,000 jobs last month, rebounding from a hurricane-impacted slowdown in October. However, the job gains over the past six months have been below 150,000, short of what some policymakers feel is needed to provide enough work for a growing population.
Despite this, many Fed officials believe rates will continue to come down, with San Francisco Fed President Mary Daly saying the labor market is in a good position. Chicago Fed President Austan Goolsbee also expects rates to be lower than today by next year. However, some officials, such as Beth Hammack and Michelle Bowman, are cautioning that it may be time to pause rate cuts due to elevated inflation.
Traders now see an 85% probability of a rate cut at the Fed’s Dec. 17-18 policy meeting, up from less than 70% before the jobs data was released. If the Fed reduces rates by a quarter-percentage point this month, it would bring the policy rate to the 4.25%-4.50% range.
Fed Chair Jerome Powell has repeated his caution about managing the endgame of its fight against inflation, and some analysts expect the Fed to pause its easing after delivering a cut on Dec. 18. However, others believe that cutting rates may be necessary to support the economy, especially if inflation remains elevated.
Source: https://www.reuters.com/markets/us/final-slate-fed-speakers-due-before-pre-meeting-blackout-begins-2024-12-06