July’s weak jobs report reduces pressure on the Federal Reserve to raise interest rates, but it doesn’t eliminate the possibility of a rate increase as inflation remains the central concern, The New York Times reports.
Employers lost 23,000 jobs, prior job growth estimates were revised lower, more people left the workforce, unemployment fell from 4.2% to 4.1%, and wage growth remained subdued, suggesting the economy may be weaker than previously believed.
Fed officials have argued that inflation is being driven mainly by supply-related factors, including energy price increases from the Iran war, tariffs and other disruptions, rather than the labor market. However, they remain frustrated that inflation has stayed above the Fed’s 2% target for years and has recently moved further away from that goal.
The Consumer Price Index report on Aug. 12 will be a key factor in determining whether officials support a rate increase at the September meeting. While some policymakers believe rates should already have been raised, investors have reduced expectations for a September hike and now anticipate the first possible increase in December.
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