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.

The U.S. economy added a smaller-than-expected tally of new jobs last month, but a sharp jump in wage growth and revisions tied to population changes and immigration make for a noisy report that might not indicate broader strength in the labor market.

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.

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

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.