Investing.com — A blowout September jobs report is “superb” and more data like that could boost hopes the US economy is at full employment with low inflation, according to Chicago Federal Reserve Bank President Austan Goolsbee.
However, in an interview with Bloomberg TV on Friday, Goolsbee flagged that a broad set of measures indicates that the labor market is still cooling, while signs are emerging that inflation may undershoot the Fed’s stated 2% target.
He added that the central bank’s policy rate remains well above an eventual “settling point” and will likely need to be ratcheted down over the next year to year-and-a-half.
The comments come after US employment growth was far stronger than expected in September, denting bets for another jumbo interest rate reduction by the Federal Reserve at its last two meetings of the year.
The US economy added 254,000 jobs last month, increasing from an upwardly-revised mark of 159,000 in August, according to a closely-watched Labor Department report on Friday. Economists had anticipated a reading of 147,000.
Meanwhile, the unemployment rate decelerated to 4.1%. Forecasts had seen the figure matching August’s pace of 4.2%.
Average hourly wages rose by 0.4% on a monthly basis, faster than predictions of 0.3% but slightly slower than an upwardly-adjusted August mark of 0.5%.
Analysts at ING have argued that the jobs market continues to hold “the key to the pace” of upcoming potential rate cuts, particularly as inflation — once the major focus of a series of aggressive Fed borrowing cost hikes — shows signs of abating.
Fed Chair Jerome Powell signaled earlier this week that the central bank would likely opt for more traditional quarter-point reductions moving forward, but stressed that the future path of rates is not preset.
Powell added that the rate-setting Federal Open Market Committee is not “in a hurry to cut rates quickly” despite announcing an outsized 50-basis point drawdown at its Sept. 17-18 gathering.