Federal Reserve officials have fresh reasons to consider holding interest rates steady in October after weaker US employment figures. According to the report, hiring slowed sharply in September, while unemployment edged higher. The figures suggest the labor market may be losing momentum. That could complicate the Fed’s efforts to control inflation without putting further pressure on employment.
US employers added 29,000 jobs in September, well below the 90,000 economists had forecast. August’s hiring figures were also revised lower, adding to signs of a slowdown. The unemployment rate rose to 4.2% from 4.1%, while wage growth weakened. Together, these developments could strengthen the case for waiting before raising borrowing costs again.
The Fed increased interest rates by a quarter of a percentage point last month as inflation remained above its 2% target. Officials indicated that another increase could follow before the end of the year if price pressures persisted and employment remained stable. Inflation linked to the Iran war and other disruptions remains a concern. However, weaker hiring gives policymakers another risk to weigh.
Traders reduced their expectations for an October rate hike following cautious comments from influential Fed officials and the latest jobs report. Market pricing suggested roughly a one-in-six chance of an increase at the October 27–28 meeting. Expectations for a December hike also declined, although an increase by then was still considered highly likely. Meanwhile, mortgage rates above 7% have added to the financial strain facing homebuyers.
The decision remains uncertain because upcoming inflation figures could change the outlook before officials meet. The Fed’s preferred inflation measure stood at 3.4% in August, still substantially above its goal. Consumer and producer price reports, fuel costs and geopolitical developments will help shape the next decision. For households with loans or plans to buy a home, a pause would mean no additional October increase, rather than an immediate fall in borrowing costs.