Many traders and analysts are convinced that the Federal Reserve will lower interest rates with the arrival of summer, especially given US employment data. Is it really that simple? There are many factors to consider.
Market participants trading short-term interest rate futures predict a Fed rate cut in June. This expectation strengthened after the government’s January report showed US unemployment at 4%.
Traders and investors also anticipate a second rate cut before the end of 2025. Their expectations are based on nonfarm payroll data. According to the Bureau of Labor Statistics, the US economy added 143,000 jobs in January.
However, this figure fell short of the median forecast of 175,000. Economist estimates ranged from a 105,000 to 240,000 increase.
In addition, December’s job numbers were revised upward from an initial 256,000 to 307,000. The average monthly job growth for 2024 was also adjusted down from 186,000 to 166,000.
As for average hourly earnings, they rose by 0.5% in January. The previous increase was 0.3%, which aligned with forecasts.
