Overview
- A stronger-than-expected August jobs report, showing about 162,000 payroll gains, surprised forecasters and undercut arguments for an immediate rate cut.
- On Friday the president posted that the Fed should cut rates and warned he would stop trading with countries where the U.S. runs a deficit if the central bank does not comply.
- Financial markets quickly raised the probability of a September interest-rate increase to roughly 60–62 percent as traders digested the jobs data.
- Fed officials have said August consumer and producer price reports next week are the key inputs for the Sept. 15–16 meeting, leaving Chair Kevin Warsh between public political pressure and recent hawkish comments he has made.
- Legal experts say a broad trade embargo would face major court challenges and would likely disrupt supply chains, raise costs for U.S. households and risk adding to inflation that already sits well above the Fed’s 2 percent goal.