Federal Reserve policymakers may feel less pressed to ramp up the pace of their policy tightening this month after data Friday showed wage gains slowed in February, rekindling hopes inflation will ease as the pandemic-disrupted labor market normalizes.
The U.S. unemployment rate ticked up to 3.6% in February as more workers entered the labor force, and average hourly earnings growth slowed to 0.2% from 0.3% in January, the Labor Department's report showed on Friday.
"This report screams soft landing and looks to be a pretty good one for the Fed," said Omair Sharif of Inflation Insights. "In the current environment, this is basically what the Fed is hoping to see."Futures tied to the Fed policy rate now point to a quarter-point rate hike this month to a target range of 4.75%-5% as more likely than a bigger half-point rate hike.if the "totality" of the data warrants, a half-point increase was seen as the far-more likely outcome.
Still, wage data in the jobs report is notoriously volatile, and some analysts continue to forecast a higher plateau for the Fed policy rate in coming months, even if it gets there stepwise in quarter-point increments.
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