Investing.com -- Friday’s better-than-expected jobs report has pushed traders’ bets for the first Federal Reserve interest rate cut of 2025 from June to July.
Traders are now assigning a 31.8% chance of a rate cut at the June 18th FOMC meeting, down from 50.4% prior to today’s jobs report.
Meanwhile, the chance of the first rate cut of 2025 at the July 30th FOMC meeting has increased to 57% from 47% following the report.
Traders are widely anticipating a 25-basis point cut in either month, putting the federal funds rate at 4 to 4-1/4 percent down from the current 4-1/4 to 4-1/2 percent rate.
Today’s April nonfarm payroll report showed the U.S. added 177,00 jobs in April, well above the consensus of 138,000. The unemployment rate was unchanged at 4.2%, while average hourly wages grew 0.2%, down from 0.3% in the March release. Prior months’ jobs were revised down by 58,000 jobs.
Economists are increasingly looking toward July for the first cut of the year following the jobs report.
David Page, Head of Macro (BCBA:BMAm) Research at AXA Investment Managers, said they continue to expect sufficient economic and labor market deterioration to warrant a Fed cut in June, but risks of this being delayed until July have grown. They forecast three cuts this year to 3.75% by year-end and two by mid-next year to 3.25%.
T. Rowe Price’s Chief US Economist, Blerina Uruci, said today’s payroll report showed there is “no evident ruptures in the labor market so far this year.” She added that the report “support my view that the market pricing of monetary policy easing was too much and too soon.” She is maintaining her forecast of two rate cuts in the second half of the year.