Investing.com – The likelihood of the Federal Reserve (Fed) increasing interest rates at its next meeting dropped even further on Friday after the monthly employment report for April missed expectations.
The U.S. economy created only 160,000 nonfarm payrolls in April, missing consensus estimates for 202,000 new job contracts and causing concern over the state of the labor market.
The Fed was closely following the health of jobs stateside as part of its determination to support the U.S. economy.
Odds dropped on the poor jobs report with federal funds futures pricing in the probability of a rate hike at the end of the Fed’s next meeting on June 15 to just 6%, according to CME Group data, compared to 10% before the publication of the nonfarm payrolls and 20% a month ago.
On Wednesday, Minneapolis Fed president Neel Kashkari had indicated that, as long as inflation remained low, the Fed should concentrate on its employment mandate.
The federal fund futures pointed to December as the market’s best guess for the next move in policy tightening with a probability of 52%.
Despite the low probability of a move in June, four Fed officials attempted to convince the market on Thursday that the door was still open to the possibility.
San Francisco Fed president John Williams stated that two or three rate hikes would still be reasonable this year.
Atlanta Fed chief Dennis Lockhart said he was still undecided on the move in June and that his final decision would be data dependent.
The head of the St. Louis Fed, James Bullard, suggested that global headwinds may have dissipated, clearing the way for policy tightening.
Dallas Fed president Robert Kaplan focused on the fact that it was difficult to know how high rates can rise, implying that he is leaning towards a tightening bias.
The first Fed officials scheduled for appearances after the jobs report will take place on Monday.
Chicago Fed chief Charles Evans will participate in a panel at the International Financial Services Forum, while Minneapolis Fed president Neel Kashkari will give a speech to the Economic Club of Minnesota.