Fed Faces More Complex Rate Cut Decision After September Jobs Report

(Seoul=Yonhap Infomax) Kyung Pyo Hong – Wall Street economists say the September jobs report released last week has further complicated the Federal Reserve’s decision on whether to cut interest rates at its next meeting.

According to Yahoo Finance on the 23rd (local time), Michael Feroli, chief U.S. economist at JPMorgan, said, “There is a high likelihood of differing opinions on whether to hold or cut rates next month.”

Feroli added, “It’s a very close call. Previously, I expected a rate cut next month, but now I lean toward skipping December and seeing cuts in January and May, followed by a pause.”

According to the U.S. Department of Labor, nonfarm payrolls increased by 119,000, surpassing market expectations of 50,000, though the previous two months’ figures were revised down by 33,000.

Economists pointed out that the September jobs report is based on data that is somewhat outdated due to the U.S. federal government shutdown.

They also noted that while the headline figure beat expectations, the underlying details were not entirely positive.

Gregory Daco, chief economist at EY-Parthenon, said, “The labor force participation rate is rising, but so is the unemployment rate. This means more people are remaining on the fringes of the labor market.”

He added, “From the Fed’s perspective, it’s notable that wage growth pressures are easing. Many Fed policymakers remain hesitant to further ease policy due to the risk of persistent inflation from tariffs.”

Kathy Jones, chief fixed income strategist at Charles Schwab, projected that the Fed is unlikely to change its rate direction based solely on this jobs report.

“We were not expecting a December rate cut, and at this point, this report does not provide sufficient grounds for the Fed to shift course,” she said. “The Fed remains divided.”

kphong@yna.co.kr

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