Fed Set to Okay Rate Cut As Job Growth Moderates

Federal Reserve officials are on the verge of lowering borrowing costs within months, a move Chairman Jerome Powell may signal in the coming week as the risks grow of imperiling a solid but moderating job market, Reade Pickert reported for Bloomberg News.

That officials don’t want to cause undue harm to the labor market by holding rates high for too long puts the closely-watched monthly jobs report on Friday even more in the spotlight, along with other readouts due on the labor market. I Photo: Board of Governors of the Federal Reserve System Facebook

US central bankers, who’ve kept interest rates at a more than two-decade high for a full year, are widely expected to leave them there again when their two-day meeting ends on Wednesday.

Instead, investors see Fed officials lowering their benchmark rate in September.

Recent data have been promising, with milder price increases alongside robust economic growth, but the Fed wants a bit more assurance that inflation will continue to fall toward their 2% target.

The downdraft in price pressures, paired with an upward creep in the unemployment rate, has brought the Fed’s two goals — maximum employment and stable prices — more into balance.

Officials want to tame inflation, but they also don’t want to cause undue harm to the labor market by holding rates high for too long. That puts the closely-watched monthly jobs report on Friday even more in the spotlight, along with other readouts due on the labor market.

The July employment report is likely to show a continued softening in the pace of hiring amid a still-limited number of layoffs.

Nonfarm payrolls are forecast to advance by 178,000 — a healthy but more moderate pace. The unemployment rate, which has climbed in each of the past three months, is seen holding at 4.1%.