The central bank is grappling with how quickly to lower interest rates after pausing cuts last month.

The January jobs report revealed a drop in the unemployment rate to 4%, accompanied by payroll gains of 143,000. A Fed interest rate cut in March is now very unlikely.

Traders of short-term interest-rate futures on Friday now expect the Federal Reserve to cut interest rates just one time this year, backing away from earlier bets on two rate cuts starting in June, after government data showed the labor market remains strong and a closely-watched survey showed a jump in consumers' inflation expectations.

Faced with a solid economy and mounting inflation concerns, the U.S. central bank has said it will “move cautiously” on cutting interest rates.

The Fed will likely pause its rate cuts this week. After that, uncertainty over Trump's tariff, immigration plans make forecasting rates a dice roll.

Federal Reserve officials on Friday said the U.S. job market is solid and noted the lack of clarity over how President Donald Trump's policies will affect economic growth and still-elevated inflation,

Federal Reserve Chair Jerome Powell appears confident in the US labor market. But that means any signs of a slowdown could force the central bank to act.

Tariffs on U.S. goods and services may complicate the Federal Reserve’s decision making as market expectations for 2025 interest rate cuts decline.

U.S. job growth slowed more than expected in January after robust gains in the prior two months, but a 4.0% unemployment rate probably will give the Federal Reserve cover to hold off cutting interest rates at least until June.