Latest jobs report signals that interest rates are unlikely to drop anytime soon
Friday’s blowout jobs report showing 353,000 jobs added in January versus expectations for 185,000 jobs is another signal that the U.S. economy remains strong.
But that good news also likely confirms the view of policymakers at the Federal Reserve that there is no rush to begin cutting interest rates, meaning the cost of borrowing for consumers — perhaps to buy a car or a house — will likely stay elevated for some time.
Earlier this week, the Fed announced it was leaving the current federal funds rate, which helps set interest rates for loans throughout the economy, unchanged at 5.25% to 5.5%.
In remarks after the announcement, Fed Chair Jerome Powell said he thought it was unlikely that the first rate cut of the post-pandemic period would come in March, as some investors were hoping. Inflation, he said, remains too hot — even at 3.4%. The central bank wants to get it back down to 2%.
“We are prepared to maintain the current target range for the federal funds rate for longer, if appropriate,” he said, referring to that 5.25% to 5.5% range.