Fed Rate Cut Debate To Heat Up As U.S. Job Market Cools

Federal Reserve policymakers have received more evidence of the US labor market cooling, potentially boosting their confidence in their fight against inflation and paving the way for a more active debate on interest-rate cuts at their upcoming meeting in late July, Ann Saphir reported for Reuters.

Recent data have shown slowing inflation, reduced services and manufacturing activity, and rising job openings and layoffs.

The Labor Department report showed a rise in unemployment and a decline in job creation, adding to a series of recent data indicating a slowdown.

At their June meeting, many Fed officials believed that inflation progress was insufficient and the economy was strong enough that rate cuts might be minimal this year. However, recent data have shown slowing inflation, reduced services and manufacturing activity, and rising job openings and layoffs.

Friday's job report revealed job gains in June at 206,000, surpassing economists' expectations, but the unemployment rate rose to 4.1%.

Revisions to prior-month estimates indicated that the average monthly payroll gain over the past three months has decreased to 177,000, below the 200,000-a-month gain that Fed Governor Lisa Cook recently estimated the economy needs to keep pace with population growth.