Strong April Jobs Report Dims June Rate Cut Hopes

President Trump has once again called for the Federal Reserve to reduce interest rates. However, the strong employment data released in April has made a rate cut in June less likely. The next Federal Reserve policy meeting is scheduled for May 6–7, 2025, and economists widely anticipate that the central bank will maintain the federal funds rate within its current range of 4.25% to 4.5%.

With the May meeting approaching, attention is now focused on the subsequent meeting on June 18. According to Nick Timiraos, only one more jobs report will be released before that meeting, leaving limited time for economic conditions to deteriorate sufficiently to justify a rate cut. The Federal Reserve places significant importance on monthly labor data to assess the economy's health. Since April’s report exceeded expectations, it has reduced the urgency for immediate monetary policy easing.

According to the US Bureau of Labor Statistics, non-farm payrolls increased by 177,000 in April, surpassing market expectations. The unemployment rate remained stable at 4.2%, continuing a narrow range that has been consistent since May 2024. Job gains were particularly significant in sectors such as healthcare, transportation and warehousing, financial activities, and social assistance, while federal government employment decreased.

Federal Reserve officials have stressed that a decision to lower interest rates would require clear evidence of rising unemployment or weakening labor demand. The latest data show few signs of declining hiring activity, providing the central bank with justification to maintain its cautious approach. Despite uncertainties, including the potential economic impacts of recently reimposed tariffs, the Federal Reserve is likely to continue its wait-and-see stance.