After the latest U.S. employment report, the probability of the Fed’s next interest rate hike falling to 1 yard rose to 75%.

(Reuters)

[Compile Wei Guojin/Comprehensive Report] After the release of the latest U.S. non-agricultural employment report on the 6th, the market price of interest rate futures compiled by CME shows that investors believe that the Federal Reserve (Fed) will raise interest rates by 0.25 percentage points by the end of this month (1 yards) as high as 75%, and another 25% think a 0.5% rate hike will occur.

Atlanta Fed President Raphael Bostic and Chicago Fed President Charles Evans both expressed support for a one-yard rate hike.

Postik pointed out that the report is another sign that the U.S. economy is gradually slowing down. If this trend continues, the Fed should be able to raise interest rates by 1 yard at the policy meeting from the 31st of this month to the 1st of February.

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U.S. government data showed that the U.S. added 223,000 non-farm jobs in December, higher than expected, and average hourly wages increased by 0.3% on a monthly basis, down from 0.4% in November and lower than expected.

While the U.S. unemployment rate fell to 3.5 percent last month, wage growth slowed amid the Fed's efforts to reduce inflation without triggering mass layoffs.

The data also showed that nearly 165 million people were working or seeking jobs in the United States last month, a record high, reflecting an improvement in labor supply. At the same time, average hourly wages, which represent labor prices, increased by 4.6% annually, the slowest growth rate in 16 months. , compared with the end of the first quarter of 2022, a full drop of 1 percentage point.

Average weekly earnings rose 3.1% annually, the slowest pace of growth since May 2021.

Bostic said that although the data showed that the tightness in the U.S. labor market was beginning to ease, it would not change his outlook for the U.S. economy, and that the Fed would have to raise interest rates further and keep them high until 2024 because "inflation is still too high." High, we have to reduce the associated imbalance," he said, saying the end-point rate would fall between 5% and 5.25%.

Evans, who is about to retire, said recent economic data supports the Fed's stance of raising interest rates by a quarter at its next meeting.

However, reducing the rate hike does not mean that the Fed is ready to stop raising interest rates, but to start raising interest rates gradually by 1 yard.

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