February jobs report settles Wall Street fears inflation could take rate cuts off the table

The February jobs report calmed concerns that a rise in inflation could prompt the Federal Reserve to hold off on reducing interest rates this year.

The data, released Friday, showed that the US economy added far fewer jobs in the previous two months than previously believed and signs of slowing wage growth are beginning to emerge.

Meanwhile, an uptick in unemployment back to 3.9%, in line with its highest level seen in the last two years, bolstered the narrative that the labor market remains resilient but isn’t growing at pace uncomfortable for the Fed in its fight against inflation.

“Alongside the rise in the unemployment rate to a two-year high and a much weaker rise in wages, there is less reason now to be concerned that renewed labour market strength will drive inflation higher again,” Capital Economics deputy chief US economist Andrew Hunter wrote in a note to clients on Friday.

 

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