Tightening Labor Market
While the economy appears steady, cracks are emerging in the labor market. Unemployment has risen to 4.3%, and recent jobs reports show sharp downward revisions, with non-farm payroll growth slowing month after month. These signs of weakness supported the FOMC’s decision to cut rates in September.
The Federal Reserve Cuts Rate in September
The Fed cut rates by 25 basis points in September, lowering the target range to 4.00–4.25% after nearly a year-long pause. While such pauses are uncommon, history shows they are not unprecedented, with similar or longer gaps seen in the 1980s, 1990s, and early 2000s. The Fed’s tone has turned more dovish as labor market conditions soften, even as inflation remains stubbornly above its 2% target.
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