Low data on the job market overshadowed an inflation print sticking last week, keeping the expectations of intact investors that the Federal Reserve will reduce interest rates at its political meeting on Wednesday.
Government data published Thursday showed that consumer prices increased by 0.4% in August compared to the previous month, an increase in the increase of 0.2% in July. Meanwhile, separate data has shown that weekly unemployment complaints increased to 263,000 – the highest in almost four years, against 236,000 revised the previous week.
The Fed weighs its double mandate of full employment and price stability when it decides to modify interest rates. Given the dynamics of a slowing market for lace -ups associated with sticky price increases, Wall Street’s strategists told Yahoo Finance that the Fed had a complicated decision to come.
“This is the worst type of configuration for the Fed,” said Yahoo Finance Claudia Sahm, chief economist of advisers and former economist of the Federal Reserve Board. “They don’t cut because we have good news on inflation. They will cut because we have bad news on employment.”
Sahm expects the federal reserve to reduce the rates of 25 base points at its two -day meeting this week. She noted, however, that inflation is “still too firm”.
Other strategists have agreed: “Inflation is still high. It has been raised, and it is evolving in the wrong direction at the moment,” Collin Martin, fixed income strategist for the Schwab Center for Financial Research, told Yahoo Martin.
Collant inflation can keep the Fed Prudent after September, said the chief economist of RSM, Joe Brusuelas.
“Yes, you will have your rate cut there in commercial land,” said Brusuelas to Yahoo Finance. “But I must tell you that the underlying tenor of data does not suggest that it is a lock that you will get three rate drops before the end of the year.”
Find out more: How jobs, inflation and Fed are all linked
Friday, investors proclaimed a probability of 76% of three rate drops this year, according to CME Fedwatch because the labor market shows increasing cracks.
Thursday employment data data was the last to highlight the slowdown. A radical revision of jobs published earlier this week has shown that the United States has employed 911,000 people less between April 2024 and March 2025 than origin.
However, the slowdown does not seem to push the economy on a cliff.
“We do not get this hard landing like collapse in the job market,” said the co-founder of the Lakshman Achuthan economic cycle. “It could become difficult at some point … but it is not yet the case.”
