Weak labor market data overwhelmed the printing of adhesive inflation last week, as investors’ expectations did not violate that the Federal Bank would reduce interest rates at its policy meeting on Wednesday.
Government data published Thursday showed consumer prices in August. August Increased by 0.4% since last month, increased from July by 0.2%. Meanwhile, individual data showed that the weekly claims of the unemployed increased to 263,000, the largest in almost four years, compared to a modified 236,000 previous week.
Fed weighs its double mandate of full employment and price stability when it decides to change interest rates. Given the dynamics of the marketplace market, along with adhesive prices, Wall Street strategists said the Yahoo Finance that the Fed has a difficult solution.
“This is the worst setup in the Fed,” Claudia Sahm, New Century Advisors chief economist and former economist of the Federal Reserve Board, told Yahoo Finance. “They won’t resist because we have good news about inflation. They will reduce because we have bad news about employment.”
The SAHM hopes that the Federal Reserve Bank will reduce the rates by 25 base points during its two -day meeting. However, she noted that inflation is “still too strong”.
Other strategists agreed, “Inflation is still increased. It has been increased and is currently moving in the wrong direction,” Collin Martin, a fixed income strategist at the Schwab Finance Research Center, told Yahoo Finance.
Lipsting inflation can maintain careful feeding after September, said RSM chief economist Joe Brusuel.
“Yes, you are going to cut your price on the land,” Brusuel told Yahoo Finance. “But I have to tell you that the main data tenor does not mean that it is a lock that you will get three tariffs by the end of the year.”
Read more: As all works, inflation and Fed are related
Since Friday, investors, according to CM Fedwatch, are 76% at three rates because the labor market shows increasing cracks.
The data of the unemployed claims on Thursday was the latest – emphasizing the slowdown. Earlier this week, a review of broad workplaces has shown that the US since 2024. April By 2025 March There were 911,000 fewer people worked than they initially reported.
However, the slowdown does not seem to force the economy over the rock.
“We do not get such a difficult landing as a collapse in the labor market,” said Lakshman Achuthan, founder of the Economic Cycle Research Institute. “At some point, it can be rude … But it’s not yet.”
