White House Economist Says Fed Rate Hikes Likely Over for 2023

White House Council of Economic Advisers Chair Chris Phelan suggested that the Federal Reserve may be done with interest rate hikes for 2023, following a weaker-than-expected September jobs report. The report showed the U.S. economy added just 29,000 jobs, far below expectations and significantly lower than the revised gain of 133,000 in August. The unemployment rate also ticked up to 4.2%, while previous months' job numbers were revised downward.

Phelan argued that the slower hiring pace does not signal a weak labor market, noting that the economy only needs around 40,000 new jobs per month to maintain a stable unemployment rate. He also criticized the Fed's September rate hike, calling it a "mistake" since inflation had already begun to ease. The Personal Consumption Expenditures price index, the Fed's preferred inflation gauge, showed headline inflation dropping to 3.4% in August from 3.7% in prior months, while core PCE slowed to 3% from 3.3%.

Despite Phelan's views, Fed officials like Vice Chair Philip Jefferson and New York Fed President John Williams have not declared victory over inflation, though they signaled a willingness to wait for more data before considering further rate increases. Financial markets now expect the Fed to leave rates unchanged at its October meeting, though another hike later in the year remains possible.