"New Federal Reserve News Agency": The January employment report is unlikely to change the Federal Reserve's wait-and-see attitude
Non-farm payroll data shows that while the labor market is slowing, it remains healthy, providing no additional room for the Federal Reserve to cut interest rates. Nick Timiraos stated that the January employment report is unlikely to change the Federal Reserve's wait-and-see attitude. The Federal Reserve is currently focused on evidence of inflation returning to target levels, and the employment market is not expected to be a source of inflationary pressure in the short term. If the employment market slows further in the future, it may reignite discussions on interest rate cuts by the Federal Reserve
The Wall Street Journal reporter Nick Timiraos pointed out that the U.S. January employment report is unlikely to change the Federal Reserve's wait-and-see attitude towards interest rate policy.
Earlier the same day, the non-farm payroll data was mixed. The U.S. non-farm employment population increased by 143,000 in January, the lowest level in three months, far below the expected 175,000. However, other data was strong, such as the unemployment rate dropping from 4.1% to 4%, significant upward revisions to employment data for November and December, and January's average hourly wage growth exceeding expectations, raising inflation concerns.
Analysts stated that although employment growth is not particularly outstanding, the decline in the unemployment rate and strong wage growth indicate that the labor market remains healthy. This report did not provide the Federal Reserve with greater room for interest rate cuts.
Nick Timiraos stated:
"The strong wage data at the end of 2024, coupled with the decline in hiring numbers in January, indicates that the U.S. job market has stabilized after experiencing a slowdown last summer.
The Federal Reserve's current main focus is to find evidence of inflation consistently declining to target levels, and officials believe that the labor market will not become a new source of inflation in the short term.
Federal Reserve officials have hinted that they prefer to maintain a passive, reactive policy stance, waiting for more data to support the next steps. In particular, they will closely monitor inflation performance in the first quarter of this year, as inflation levels during this period have typically been high in recent years.
When more obvious signs of a slowdown in the labor market appear, it may reignite discussions at the Federal Reserve about interest rate cuts, as this could indicate that the current policy stance is suppressing economic growth."
Federal Reserve Chairman Jerome Powell recently stated that the labor market is "quite stable," but he and other officials do not wish for the labor market to cool further.
BlackRock Senior Portfolio Manager Jeff Rosenberg pointed out that the non-farm data is mixed, but the key point is that "this is a very strong labor market," and it will not change the Federal Reserve's policy outlook