Traders raised bets for a rate cut at the Federal Reserve’s Dec. 17-18 policy meeting to 90%, from less than 70% before the report.
A quarter-point reduction would put the Fed’s official rate at 4.25%-4.5%, one percentage point below the level in September, when the central bank began the cuts expressing concern about the deterioration of the labor market. Traders expect the cost of short-term borrowing to fall another 75 basis points next year.
“A payroll rate of 150,000 isn’t exactly a wonderful economy, but it doesn’t look like it’s slowing down as sharply as everyone expected a few months ago,” said Gennadiy Goldberg of TD Securities. “The Fed can safely make another cut in December and then perhaps communicate a possible pause as early as the January meeting,” he added.
Earlier in the week, Fed officials pointed to Friday’s November jobs numbers as one of the key pieces of data they are missing to make a decision.
On Monday, Fed Governor Christopher Waller said he is leaning toward a rate cut but will reserve his decision as he reviews employment figures and inflation data due next week.
In his comments on Wednesday, Fed Chair Jerome Powell noted that inflation is higher than policymakers expected at this time, and repeated his previous comments that the Fed could be careful in managing the end. of its fight against inflation, which has lasted almost three years.
Fed Governor Michelle Bowman said Friday that inflation risks to the economy remain real, prompting caution with further rate cut decisions.
Chicago Fed President Austan Goolsbee and his San Francisco Fed President Mary Daly and Cleveland Fed President Beth Hammack are scheduled to speak or post comments later in the day.
The Fed’s internal communications rules prohibit public comments on monetary policy beginning the Saturday before the week before each two-day meeting.
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