The Federal Reserve is still expected to raise U.S. interest rates in December but signs the labor market may be in a soft patch have dented confidence the central bank will pull the trigger, according to a Reuters poll.
U.S. job growth slowed abruptly in August and September, prompting financial markets to push back until early 2016 their expectations of the first interest rate hike in nearly a decade.
But the poll of over 90 economists showed a 55 percent probability of a lift-off in the Fed’s short-term interest rate at the Dec. 15-16 policy meeting, down from 60 percent in a Sept. 22 poll.
Although 58 of 79 respondents were expecting a move by the end of December, they were not fully convinced the U.S. central bank would pull the trigger this year.
“The bigger question will be determining whether this deterioration in labor market momentum is part of a broader inflection point for the economic recovery,” said Millan Mulraine, deputy chief economist at TD Securities in New York.
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