Fed Pulls Rate Hike Trigger for December

The Federal Reserve may skip a rate hike in October but is likely to increase borrowing costs again in December, according to a recent development. Fed policymakers were already inclined against raising rates this month to allow for more economic data before making another decision. This approach remains intact after the latest job market report showed slower wage growth and a cooler than expected labor market.

Chicago Federal Reserve President Austan Goolsbee stated that there is still room for anything to be on the table, indicating that the Fed may consider various options at their next meeting. He noted that the inflation side of the Fed's job is where the problem lies, and they must keep an eye on it to prevent it from getting out of control.

The Labor Department reported that US employers added only 29,000 jobs last month, falling short of the expected 90,000. The September unemployment rate rose to 4.2% due to an increase in workforce entrants, but low unemployment insurance claims suggest no broad layoffs. Wage growth slowed after the Fed raised short-term borrowing costs last month.

Until this week, expectations for a brisk series of rate hikes had been rising, along with longer-term bond yields and mortgage rates topping 7%. However, Fed Vice Chair Philip Jefferson and New York Fed President John Williams expressed their preference to see more data before considering further action. This led traders to slash bets on a hike at the Fed's October meeting.