Summary
According to the Bureau of Labor Statistics, the US economy created 275,000 new jobs in February, more than the 198,000 predicted by experts. The amount exceeded both the January 229,000 corrected figure and the January 255,000 monthly average for 2023.
For the second year in a row, the unemployment rate stayed below 4 percent, marking the longest such period in more than 50 years. It did, however, gradually increase from 3.7 percent to 3.9 percent, and the job market is still appearing to be in good shape.
The average hourly salary increased by 0.1 percent in February and has now increased by 4.3 percent over the previous 12 months. When all the statistics are combined, the overall result is “Not too hot, not too cold.” Perfect, according to Moody’s Analytics chief economist Mark Zandi.
What does the Fed’s response to February’s increase in unemployment mean? Will the rate of interest decline?
The central bank’s officials will review the most recent economic statistics in advance of their two-day meeting that starts on March 19. When they conclude on Wednesday, March 20, it is generally anticipated that the Federal Reserve will maintain the current federal funds rate.
In order to set its interest rate policy and bring inflation back to its objective of two percent, the Federal Reserve has been closely observing the economic data as it is released. Strong job growth, low unemployment, and robust pay growth—albeit not as bubbly as in 2022—have been reported in monthly figures.
It started raising rates sharply in March 2022 in an effort to control the greatest inflation in forty years, which peaked in June 2022 at 9.1 percent. However, since its July 2023 meeting, it has held off on hiking rates as price rises have halted.
Investors are increasingly curious about when interest rate reductions by authorities will start. Unless there is a sharp slowdown and a jump in unemployment, which would force authorities to accelerate any prospective interest rate decreases, that isn’t anticipated until June. As of right now, though, it seems like the US economy has avoided a recession thanks to the Federal Reserve’s ability to reduce inflation.
What will the Fed interest rate decision be?