Fed Divided on Rate Cuts After Jobs Shock
The Fed is facing a sharp internal debate after last week's surprise job losses. While traders are now betting on earlier rate cuts, some officials like Cleveland Fed President Beth Hammack are warning of potential *hikes* if inflation from rising oil prices persists. The bond market is reflecting the chaos, with Treasury yields and mortgage rates jumping.
The February jobs report was a significant shock, with the economy shedding 92,000 jobs instead of the 60,000 gain economists had forecast. This pushed the unemployment rate up to 4.4%. The bad news was compounded by downward revisions to the previous two months, erasing a further 69,000 jobs from the tally. Job losses were widespread across several sectors. The healthcare industry lost 28,000 jobs, partly due to strike activity, while manufacturing and construction payrolls also declined by 12,000 and 11,000, respectively. Even the information sector and transportation and warehousing continued to trend downward. This labor market weakness contrasts sharply with the Fed's other mandate: inflation. The latest data for January showed the annual inflation rate cooling to 2.4%, with core inflation (excluding food and energy) hitting 2.5%, its lowest point since March 2021. [cite: 1, 2,
