The Fed was expected to hike interest rates in September. Don't bet on that now, economists say. - CBS News
Following a weak July jobs report, economists suggest the Federal Reserve may hold interest rates steady in September rather than hiking them. The labor market's unexpected decline complicates the Fed's goal of balancing employment growth with inflation control.
Why it matters
Changes in Fed interest rate policy directly impact borrowing costs, mortgage rates, and overall economic growth in the United States.
What a difference a day can make for monetary policy. On Thursday, interest rate futures were decidedly tilted toward the Federal Reserve hiking its benchmark rate in September, according to CME FedWatch, which tracks traders to forecast the central bank's policy decisions. But after Friday morning's dismal July jobs report, which showed that employers unexpectedly shed 23,000 jobs last month, that probability has now flipped, with the Fed expected to hold steady next month. The latest employment figures suggest the labor market may be much weaker than previously thought. On Friday, the Labor Department also revised down hiring data for May and June by a combined 103,000. The suddenly wobbly job market complicates the Fed's dual mission of maximizing employment while keeping consumer prices stable.
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