"One could argue that last week's surprisingly robust jobs report has made Jerome Powell's job harder, as it defies the narrative economists had widely believed when it came to the slowing pace of the economy.On the other hand, some might argue that the Fed chairman's exit from the top job at the central bank just got easier, because it may support a call for inaction by the rate-setting Federal Open Market Committee (FOMC)."
"Prior to Wednesday, speculators had been fairly balanced in their view on whether a 25bps cut would come at the FOMC's next meeting in March, giving it a probability of around 40%, per CME's FedWatch barometer. But the jobs report, showing nonfarm payroll employment rose by 130,000 in January, blew those odds out of the water: They now indicate a more than 92% likelihood of a hold at the next meeting."
A surprisingly strong January jobs report, with nonfarm payrolls up 130,000, substantially shifted market expectations away from a March rate cut. Speculative odds for a 25bps reduction fell from roughly 40% to more than 92% likelihood of a hold at the next FOMC meeting. The Fed ties policy moves to its dual mandate of 2% inflation and maximum employment, making robust job growth a reason to delay easing. Oxford Economics labeled the situation a "puzzlement," and consumer-sector data driven by wealthy households further obscures the outlook for growth and policy decisions.
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