 "Federal Reserve")
Ann Saphir
The US Federal Reserve is likely done raising interest rates, traders bet on Friday after a government report showed the unemployment rate rose last month and wage growth cooled.
Futures that settle to the Fed's policy rate had already priced in only a slight chance of a rate hike this month. They now reflect the chance of US central bankers tightening policy any further this year dropping to about 38% from about a 45 per cent chance seen before the latest jobs report.
That Labour Department report showed the unemployment rate jumped to 3.8 per cent last month, from 3.5 per cent previously, and average hourly earnings rose 4.3 per cent from a year earlier, compared with 4.4 per cent in July. Employers added 187,000 workers to their payrolls last month, more than they did in July, though revisions showed job growth in the prior months was not as strong as first reported.
“This report is likely to put the Fed on hold in September, and if we get more positive inflation news in September and October, the Fed is likely done, and we’ve seen the end of the rate hikes,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
The Fed raised short-term borrowing costs aggressively starting in March 2022 to fight 40-year-high inflation, most recently in July when it increased its target range for the benchmark rate to 5.25 per cent-5.50 per cent. Inflation has eased from its peak of 7 per cent last summer to 3.3 per cent last month, based on the Fed's preferred inflation measure, but policymakers say it is still too high and have been looking for the labour market to soften somewhat to keep downward pressure on prices. The Fed targets 2 per cent inflation.
