The Federal Reserve is expected to cut interest rates by 25 basis points at its next policy meeting, according to Nick Timiraos of The Wall Street Journal.
The Fed, which previously implemented a major reduction of 50 basis points in September, is trying to determine the appropriate rate after several rate hikes aimed at reducing high inflation, the WSJ reported.
The US jobs report on Friday reinforced expectations for a smaller rate cut. The economy added far fewer jobs than expected in October, although the numbers were impacted by recent hurricanes and the ongoing labor action.
Nonfarm payrolls rose by 12,000 in the month, down from a revised-down 223,000 in September. Economists had expected a reading of 106,000. Employment growth for the previous two months was also revised downward, indicating the labor market is slowly cooling.
Importantly, the Labor Department noted that this is the first survey collected since Hurricanes Helene and Milton hit the US Southeast, causing extensive damage to the region. However, officials could not say exactly how much the storm affected the job report.
Meanwhile, the overall unemployment rate stood at 4.1%, the same as the previous month's rate and economists' expectations. Average hourly earnings also increased by 0.4% from the revised down rate of 0.3%.
The federal funds rate is now in the 4.75% to 5% range following a half-point reduction in September. Fed officials said the large cuts were aimed at supporting labor demand at a time when inflationary pressures are easing.
According to CME Group's closely monitored FedWatch Tool, the market now rates a 99.7% probability that the Fed will cut borrowing costs by a quarter point. There is also an 81.5% probability that the central bank will do the same at its December meeting.
Investors hope the Fed's statement and Chairman Jerome Powell's comments will provide more clues about whether officials believe the economy's resilience will continue and they may cut rates more slowly as a result.
