However, the latest job figures are making that argument less convincing. The Labour Department reported that the US added 139,000 jobs in May
surpassing expectations, while the unemployment rate remained steady at 4.2%. The continued strength of the labour market does not typically indicate the kind of slowdown that prompts rate cuts.
Fed officials, on the other hand, are more worried about inflation than jobs. They’ve been signalling that they want to be patient before changing rates again.
Federal Reserve Governor Adriana Kugler and Kansas City Fed President Jeff Schmid recently stated that they are focused on the risk of inflation rising if rates are lowered prematurely.
“I see greater upside risks to inflation at this juncture and potential downside risks to employment and output growth down the road, and this leads me to continue to support maintaining the FOMC’s policy rate at its current setting if upside risks to inflation remain,” Kugler said Thursday in a speech at the Economic Club of New York.
Kansas City Fed president Jeff Schmid also said Thursday he is very focused on the risk for higher inflation from tariffs and that the Fed should “not let down our guard.”
As a result, investors see little likelihood of a rate cut at the Fed’s upcoming June meeting. Most expect the central bank to maintain current rates until at least September. The Fed hasn’t changed its benchmark rate so far in 2025, after slashing it by a full percentage point late last year amid uncertainty over Trump’s trade policies.
With inputs from agencies
(Edited by : Akanksha upadhyay)
First Published: Jun 6, 2025 11:47 PM IS
