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    Minneapolis Fed’s Kashkari expects lower interest rates later this year

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    Minneapolis Federal Reserve President Neel Kashkari said Friday he expects to see interest rates lower this year if the economic data continue to move in the same direction.
    Kashkari’s colleagues in recent days have expressed some concern over what fiscal policy could do to the inflation picture.

    Minneapolis Federal Reserve President Neel Kashkari said Friday he expects to see interest rates lower this year if the economic data continues to move in the same direction.
    In a CNBC interview, the central bank official expressed confidence that inflation will continue to drift down to the Fed’s 2% target, while Friday’s nonfarm payrolls report showed the labor market continues to look strong.

    “Ultimately, our job is maximum employment and stable prices. If we see very good data on the inflation front while the labor market stays strong, then I think that would move me towards supporting easing further,” Kashkari said on “Squawk Box.” “I don’t know why we’d have to keep rates where they were if we really saw inflation coming down quickly.”
    Headline inflation in December ran at a 2.6% annual rate, according to the Fed’s preferred personal consumption expenditures price index. Excluding food and energy, core inflation was a bit higher, at 2.8%.
    That’s still considerably above the central bank’s 2% goal, though Kashkari said he expects housing-related data, particularly on rents, to ease through the year and eventually bring prices back to target. Kashkari is not a voter this year on the rate-setting Federal Open Market Committee but will vote in 2026.
    “We will get inflation down to 2%. We’re committed to that,” he said.
    However, Kashkari’s colleagues in recent days have expressed some concern over what fiscal policy could do to the inflation picture. President Donald Trump has pushed aggressive tariffs against the largest U.S. trading partners, and some economists worry that they could reignite inflation if they trigger a trade war.

    “We’ll have to see where what that uncertainty looks like. What’s the range of the negotiation that’s taking place?” he said. “Obviously tariffs are hard, because it’s not simply what we do in America, it’s how other countries respond and the back and forth.”
    Markets largely expect the Fed to be on hold until at least June. The Fed at its meeting in late January voted to keep its benchmark borrowing rate steady after a full percentage point of cuts in 2024.
    “My colleagues and I basically have said we need to wait and see. We don’t know enough information about what’s going to be announced,” Kashkari said. “The good news is … the economy is in a good place. So, we’re in a very good place to just sit here until we get a lot more information on the tariff front, on the immigration front, on the tax front, etc. All of those are going to be important.”

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    Here’s where the jobs are for January 2025 — in one chart

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    Health care was a bright spot once again for the U.S. economy in January, even as overall job growth showed signs of slowing.
    Data on job growth in different areas of the economy from the Bureau of Labor Statistics showed health care and social assistance as the leading category, adding 66,000 jobs. Retail trade and government were also strong, adding more than 30,000 jobs apiece.

    The gains in health care were broadly in line with the growth rates from 2024. The jump in retail jobs was more surprising, as that sector showed “little net change” last year, according to the bureau.
    There were some pockets of weakness, with professional and business services losing 11,000 jobs. Employment in leisure and hospitality, one of the biggest areas of job growth after the Covid pandemic, also shrank slightly.
    Overall, the net job growth of 143,000 was well below the upwardly revised growth of 307,000 in December. However, the unemployment rate fell and wage growth was strong, pointing to a solid and steady job market despite the lower headline number.
    Looking at January, “what we see is a labor market that’s basically operating at full employment. And so I think the real question going forward is: Can we sustain full employment?” University of Michigan professor and former Department of Labor chief economist Betsey Stevenson said Friday on “Squawk Box.” More

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    U.S. economy added just 143,000 jobs in January but unemployment rate fell to 4%

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    Nonfarm payrolls in January rose by a seasonally adjusted 143,000 for the month, down from 307,000 in December and below the 169,000 forecast. The unemployment rate nudged lower to 4%.
    Job growth was concentrated in health care (44,000), retail (34,000) and government (32,000).
    Wages rose more than expected: Average hourly earnings increased 0.5% for the month and 4.1% from a year ago, compared with respective estimates for 0.3% and 3.7%.
    The report also featured significant benchmark revisions to the 2024 totals.

    Job creation was lower than expected in January, though the unemployment rate edged down and worker wages rose sharply, the Bureau of Labor Statistics reported Friday.
    Nonfarm payrolls climbed by a seasonally adjusted 143,000 for the month, down from an upwardly revised 307,000 in December and below the 169,000 forecast from Dow Jones. The unemployment rate nudged lower to 4%.

    The report also featured significant benchmark revisions to the 2024 totals that saw substantial downward changes to the previous payrolls level though upward revisions to those who reported holding jobs.

    The revisions, which the BLS does each year, reduced the jobs count by 589,000 in the 12 months through March 2024. A preliminary adjustment back in August 2024 had indicated 818,000 fewer jobs.
    The level of those reporting at work, as computed in the household survey, soared by 2.23 million, the product of annual adjustments for population and immigration in the country. The household survey happens separately from the establishment survey used to tally total jobs.
    Job growth for January was concentrated in health care (44,000), retail (34,000) and government (32,000). The total gain for the month was slightly off the average 166,000 in 2024, the BLS said. Social assistance added 22,000, while mining-related industries lost 8,000.
    Along with the upward revision to the December count, the BLS took up the November total to 261,000, a change of 49,000. The two months together saw upward revisions of 100,000.

    The unemployment rate moved lower as labor force participation increased, rising to 62.6%, up 0.1 percentage point from December. A broader measure that includes discouraged workers as well as those holding part-time jobs for economic reasons held steady at 7.5%.
    While job gains were muted, wages rose more than expected: Average hourly earnings increased 0.5% for the month and 4.1% from a year ago, compared with respective estimates for 0.3% and 3.7%.

    Markets showed little reaction to the report, with stock market futures around flat and Treasury yields higher.
    “A lower-than-expected January payrolls number was more than offset by upward revisions to November and December’s totals and a downtick in the unemployment rate,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “Those who’d hoped for a soft report that would nudge the Fed back into rate-cutting mode didn’t get it.”
    The report is the first jobs count since President Donald Trump took office on Jan. 20 with plans to cut taxes, boost growth and level the global playing field on trade by slapping heavy tariffs on the biggest U.S. trading partners.
    Federal Reserve officials are watching the numbers closely as they contemplate their next monetary policy moves. The Fed cut its benchmark rate by a full percentage point in the latter part of 2024, but policymakers of late have been advocating a more cautious pace ahead as they evaluate policy ramifications.
    Markets expect the Fed to stay on hold until at least June, with a second cut down to about a 50-50 chance, according to futures pricing measured by the CME Group.
    While some economists had expected that the California wildfires would reduce the job count, the bureau said they “had no discernible effect” on the total.
    Correction: The unemployment rate fell to 4% in January. The headline on an earlier version misstated the move.

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    Worthwhile Canadian leadership election

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    $99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

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    The report will revise figures from 2023 and 2024. Here’s what to know.

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    The Labor Department’s latest monthly report on hiring and unemployment will include revisions for previous months. The revised figures should provide a more accurate picture of the U.S. job market, but they could also sow confusion.The monthly job figures are based on two surveys, one of employers and one of households. Those surveys are generally reliable, but they aren’t perfect. So once a year, the government reconciles the numbers with less timely but more reliable data from other sources.Figures in the employer survey will be revised sharply downward to align with data from state unemployment offices showing that employers added hundreds of thousands fewer jobs in 2023 and 2024 than initially reported. The updated figures should show slower but still healthy job growth in those years.The other change applies to the household survey. It will reflect an updated methodology that the Census Bureau considers a better reflection of recent immigration in its population estimates. That will show up as a huge, one-month jump in virtually every measure that is based on them, and preclude comparisons with previous months. But measures based on ratios — like the unemployment rate and the labor force participation rate — should be mostly unaffected. More

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    FirstFT: Big Tech lines up $300bn of AI spending

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    $99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

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    Solid Labor Market Gives Fed Cover to Extend Rate Pause

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    Less than six months ago, Federal Reserve officials were wringing their hands about the state of the labor market. No major cracks had emerged, but monthly jobs growth had slowed and the unemployment rate was steadily ticking higher. In a bid to preserve the economy’s strength, the Fed took the unusual step of lowering interest rates by double the magnitude of its typical moves.Those concerns have since evaporated. Officials now exude a rare confidence that the labor market is strong and set to stay that way, providing them latitude to hold rates steady for awhile.The approach constitutes a strategic gamble, which economists by and large expect to work out. That suggests the central bank will take its time before lowering borrowing costs again and await clearer signs that price pressures are easing.“The jobs data just aren’t calling for lower rates right now,” said Jon Faust of the Center for Financial Economics at Johns Hopkins University, who was a senior adviser to the Fed chair, Jerome H. Powell. “If the labor market seriously broke, that may warrant a policy reaction, but other than that, it takes some progress on inflation.”Across a number of metrics, the labor market looks remarkably stable even as it has cooled. Monthly jobs growth has stayed solid and the unemployment rate has barely budged from its current level of 4.1 percent after rising over the summer. The number of Americans out of work and filing for weekly benefits remains low, too.“People can get jobs and employers can find workers,” said Mary C. Daly, president of the San Francisco Fed, in an interview earlier this week. “I don’t see any signs right now of weakening.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    What Privatization of Fannie Mae and Freddie Mac Means

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    Fannie Mae and Freddie Mac were bailed out by the government during the housing crisis nearly 17 years ago. The Trump administration is considering letting them go private again.Fannie Mae and Freddie Mac, two giant mortgage finance firms, have been controlled by the federal government for nearly 17 years, but a long-dormant idea of making them private businesses is starting to make the rounds in Washington again.Scott Turner, the secretary of Housing and Urban Development, said in an interview this week that coordinating the effort to privatize the two firms would be his priority. One of President Trump’s backers, the hedge fund investor William A. Ackman, is calling on the president to quickly move forward on the privatization.But Fannie and Freddie underpin the nation’s $12 trillion mortgage market, so they need to be handled with care. Scott Bessent, the Treasury secretary, said last month that any plan for ending the so-called conservatorship of the two firms “should be carefully designed and executed.”The last time Mr. Trump was president, a number of his advisers took steps toward coming up with a plan for releasing Fannie Mae and Freddie Mac from government control. In the end, the first Trump administration took no action, and the Biden administration put the issue on the back burner.Here is a quick primer on why Fannie and Freddie are so critical to the mortgage market and some of the issues likely to come up in the debate over how to end the conservatorship.What do Fannie and Freddie do?“No conservatorship should be indefinite,” Scott Bessent, the Treasury secretary, wrote in a response to questions before his confirmation.Haiyun Jiang for The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More