Fed's September rate move now seen as a hold amid weak jobs data

Traders had been betting on a September increase in the Federal Reserve’s benchmark rate, but the latest employment numbers have altered that view. Friday’s report revealed employers shed 23,000 jobs and the Labor Department cut May-June hiring data by a total of 103,000, suggesting a softer labor market than previously thought. Consequently, the CME FedWatch index shows the chance of a rate hold at 56%, up from 45% the day before.

The Fed now faces a tougher balancing act: slowing inflation, which recently eased but stays above the 2% goal, while avoiding further damage to a fragile job market. Analysts such as Cory Stahle and Heather Long warn that continued labor weakness could push the central bank to reconsider the timing of any hikes or even entertain cuts. Yet some economists, including those at Bank of America, maintain that inflation concerns will keep rate hikes on the agenda later this year.