The mildly disappointing jobs report in August will be little more than a speed bump on the Federal Reserve’s road to continue tightening, economists said Friday.
Fed watchers think the Fed is locked in to a plan to announce its intention to shrink its massive balance sheet at its meeting in 20days.
And they expect the Fed to follow through with a another rate hike in December.
“The August jobs report is not going to throw them off track,” said Omair Sharif, senior U.S. economist at Societe Generale, in an interview.
The U.S. added 156,000 jobs in August, below consensus estimates of a gain of 170,000. There were also downward revision to job growth in June and July.
“It would likely take clearer signs of labor market softening, or political turbulence, to derail a year-end rate hike,” said Sal Guatieri, senior economist at BMO Capital Markets.
Investors see only a 36% chance of a rate hike in December, according to the CME Group’s FedWatch tool.
But events earlier this year show that Fed jawboning can raise these odds quickly.
Reference: Market Watch
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