The last jobs report of 2024 showed the labor market in good shape after the Federal Reserve warned of a more cautious approach to interest rate cuts this year.
Nonfarm payrolls climbed 256,000 in December, according to data from the Bureau of Labor Statistics (BLS) released Friday. That topped Wall Street’s expected 153,000 jobs for the month, per estimates compiled by FactSet (FDS-0.48%).
Unemployment held steady at 4.1%, down 0.1 percentage point from a month prior and below analysts’ projections.
When the Fed began its rate cutting campaign in September, it put inflation on the back burner as concerns about a declining labor market took center stage. In the following months, however, attention shifted back to inflation after a series of slightly hotter-than-expected readings.
Last month, the Federal Open Market Committee carried out its third consecutive reduction of the federal funds rate of the year. The central bank’s decision making arm voted to lower the benchmark interest rate by a quarter point, to 4.25%-4.50%.
In its updated Summary of Economic Projections, however, Fed officials indicated that they may carry out just two more reductions to the federal funds rate in 2025, given 25-basis-point cuts.
“As for additional cuts, we’re going to be looking for further progress on inflation as well as continued strength in the labor market,” Fed Chair Jerome Powell said in a press conference following the decision. “And as long as the economy and the labor market are solid, we can be cautious as we consider further cuts.”
Central bank officials expect both core and headline PCE inflation to tick down slightly to 2.5% by the end of this year, still considerably above the Fed’s 2% target level.
Measures of December inflation, including the Fed’s preferred personal consumption expenditures index (PCE), are set to be published later this month.
This is breaking news and will be updated.
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