Despite his argument, the latest employment statistics weaken his case. The Labour Department announced that the US added 139,000 jobs in May
, exceeding forecasts, while the unemployment rate held steady at 4.2%. The robust labor market typically does not suggest the sort of downturn that warrants rate cuts.
In contrast, Fed officials are more concerned about inflation than job creation, signaling a cautious approach before any changes to interest rates.
Federal Reserve Governor Adriana Kugler and Kansas City Fed President Jeff Schmid recently expressed their focus on the risks of inflation surging if rates are reduced too quickly.
“At this juncture, I see greater upside risks to inflation and potential downside risks to employment and output growth down the line, which leads me to continue supporting the FOMC’s policy rate at its current level if inflationary pressures persist,” Kugler stated during a speech at the Economic Club of New York on Thursday.
Jeff Schmid, Kansas City Fed president, also mentioned on Thursday that he is particularly wary of higher inflation risks stemming from tariffs and stressed the need for the Fed to remain vigilant.
Consequently, investors anticipate little chance of a rate cut at the Fed’s upcoming meeting in June. Most expect the central bank to keep rates steady until at least September. So far in 2025, the Fed has not adjusted its benchmark rate after lowering it by a full percentage point late last year due to uncertainty regarding Trump’s trade policies.
With inputs from agencies
(Edited by : Akanksha Upadhyay)
First Published: Jun 6, 2025 11:47 PM IST
