June 23, 2025
Last week, the Federal Reserve’s Open Market Committee met to consider the present and future direction of interest rates. Most analysts did not expect a rate decrease at this meeting, despite increased pressure from the Administration. It turns out that these predictions were right on point. As we pointed out last week, the recent data on inflation has been encouraging — including the Consumer Price Index released two weeks ago.
The most recent jobs report seemed to bolster the analysts’ predictions of another month of no rate changes. Even though the increase of 139,000 jobs was seen as a sign that there is no recession on the horizon, the number of jobs added last month and over the previous quarter is lower than it has been for the past two years. And the revision of the previous two months of job data downward by 95,000 jobs has reinforced the notion that the job market is weakening somewhat.
We will repeat our usual statement – no recession is likely if the economy continues to add jobs. However, the economy is clearly slowing in light of the fact that job gains have eased. Plus, the reduction of Federal jobs and the implementation of tariffs are still working their way through the economy. Thus, if the number of monthly job gains falls below 100,000 – it is much more likely that the Fed will take action – especially if inflation stays where it is today. And if the tariff situation is resolved or at least eased through negotiations, the certainty of future rate cuts will increase significantly.
Source: Origination Pro
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