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The Fed was expected to hike interest rates in September. Don't bet on that now, economists say.
CBS News • • business
Key Points:
- The Federal Reserve's likelihood of hiking interest rates in September dropped after July's jobs report revealed a loss of 23,000 jobs and downward revisions to prior months, signaling a weaker labor market.
- The Fed faces a dilemma between raising rates to combat persistent inflation, which was 3.5% in June, and potentially holding or cutting rates to support a faltering job market.
- Inflation remains above the Fed's 2% target, but wage gains over the past seven years have largely been eroded by rising consumer prices, squeezing American workers' purchasing power.
- Economic uncertainty from factors like high energy prices, tariffs, and immigration policies has caused employers to delay hiring decisions, further weakening labor market conditions.
- Despite recent data, some economists predict the Fed will prioritize controlling inflation and proceed with rate hikes later this year, possibly starting in September.
