Fed official Musalem stated that the U.S. labor market is in strong condition, characterizing it as near full employment. The unemployment rate currently stands between 4.2% and 4.4%, with payroll growth described as solid but modest. This assessment reduces urgency on the employment side of the Fed’s dual mandate, which also requires monitoring inflation remaining above the 2% target. Markets now anticipate a slight increase in rate hike probabilities by the September 2026 meeting.
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