Fed Ponders Interest Rate Hike as Job Market Cools Down

The Federal Reserve may skip raising interest rates in October as the job market cools down. This decision is based on Friday's report, which showed that US employers added only 29,000 jobs last month, less than the expected 90,000. Chicago Federal Reserve President Austan Goolsbee said he felt the labor market is steady, but noted that inflation is still a concern.

Fed policymakers are weighing the risks of moving too slowly to tame down price pressures against potential harm to the labor market if they move too fast. They will likely deliver at least one more increase by year's end if inflation persists. However, after this week's comments from Fed Vice Chair Philip Jefferson and New York Fed President John Williams, traders have slashed bets on a hike at the October meeting.

JPMorgan chief US economist Michael Feroli wrote that Friday's report showing deceleration in wage growth 'should give comfort to Fed policymakers that the economy is not overheating in a way that calls for a hurried rate hike cycle.' It would now take a very strong Consumer Price Index (CPI) measure of inflation coming just before the Fed's October 27-28 policy meeting to make the October meeting live.