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How will the US jobs slowdown affect the interest rate path?

How will the US jobs slowdown affect the interest rate path? the release of jobs data for last April, all eyes are on the next step of the Federal Reserve (the US central bank), at a time when the US economy added fewer jobs than expected.

How Will The Us Jobs Slowdown Affect The Interest Rate Path?
How Will The Us Jobs Slowdown Affect The Interest Rate Path?

 

Data revealed yesterday, Friday, that the total non-agricultural jobs reached 175,000 last month, which is less than expectations of 238,000 jobs.

This number also represents a decrease from the upwardly revised total of 315,000 jobs added last March, according to the same source.

In addition, the unemployment rate rose slightly to 3.9% last April from 3.8% the previous month.

Commenting on these data, the specialized website “Investing” quoted Bank of America analysts as confirming that although this development may not be completely negative for the economy, it indicates a natural slowdown in employment growth.

The bank maintains its expectations for the first interest rate cut next December ,  followed by four interest rate cuts of 25 basis points in 2025.

How will the US jobs slowdown affect the interest rate path?

On the other hand, analysts at the Davidson Financial Services Group indicated to Investing that a rise in the unemployment rate may indicate a slowdown in the economy, which may affect the Federal Reserve’s tightening cycle.

This assessment is consistent with growing speculation that the Fed may reassess its monetary policy stance in light of the latest employment numbers.

The jobs data reignited discussions about the path of the US economy and the role of the Federal Reserve in facing future challenges.

With employment growth showing signs of moderation and the unemployment rate rising, policymakers face increasing pressure to strike a balance between supporting the recovery and addressing inflationary pressures.

Last Wednesday, the US Central Bank kept interest rates steady in the range of 5.25% and 5.50%.

He indicated that he was still leaning towards eventually lowering borrowing costs, but he put a red flag on the recent disappointing inflation readings and pointed to a possible pause in the move towards more balance in the economy.

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