Home / News / World /  US Federal Reserve seen sticking to 75-basis point rate hike after jobs report

Traders of futures tied to the Federal Reserve's policy rate added to bets on Friday that the U.S. central bank will deliver a fourth straight 75-basis point interest rate hike next month after a closely watched report showed U.S. employers did not slow hiring much, despite sharply higher borrowing costs.

Fed funds futures prices implied a 90% chance that the Fed will raise its policy rate to a 3.75%-4% range when it meets Nov. 1-2, up from about 85% before the Labor Department report, 

Hiring in the US continued at a solid, yet more moderate pace last month and the unemployment rate slipped two-tenths of a percentage point to 3.5%, indicating the labor market remains tight and has so far proven resilient to steep interest-rate hikes by the Fed. Friday’s US jobs report will give a fresh indication of inflation pressures in the country.

The data showed 263,000 jobs were added in September – the smallest monthly advance since April last year – after a 315,000 gain in August, a Labor Department report showed Friday. The unemployment rate unexpectedly dropped to 3.5%, and average hourly earnings rose firmly.

The steady slowdown in new positions is good news for the US Federal Reserve as it works to cool the economy and tamp down scorching inflation.

The US Federal Reserve officials have showed no intention of backing down from the most aggressive rate hike campaign in decades, emphasising that the inflation fight was ongoing.

"We are also seeing other inflation trends. Commodities, which have been falling for the last few months, are likely seeing a temporary bottom. There are some signs of firmness in metals as well as oil due to supply side tightness," James said.

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