Federal Reserve Cautious as US Labor Market Remains Strong Amid Economic Uncertainty

The US labor market’s strength over the past two years has allowed the Federal Reserve to take a cautious approach to lowering borrowing costs. The central bank is closely monitoring employment conditions and inflation to guide its decision on when to begin an interest rate cutting cycle. In this weekly newsletter, Roula Khalaf, Editor of the FT, selects her favorite stories that shed light on these developments.

On Friday, the Bureau of Labor Statistics reported that the US added 206,000 jobs in June, surpassing forecasts but down from the previous month. Economists expected non-farm payrolls to have increased by 190,000. Additionally, there was a slight increase in the US unemployment rate from 4.0% to 4.1%.

Just days after the minutes of the central bank’s June meeting showed members of the rate-setting committee were more attentive to the downside risks to the US labor market, Friday’s data provides further insight into this developing story. As such, economists are closely monitoring employment conditions and inflation as they wait for a signal from policymakers about when it may be appropriate to begin an interest rate cutting cycle.