A stronger-than-expected jobs report for April will likely reinforce Fed Chair Jerome Powell’s stance of being patient about any monetary policy changes, even as President Trump again called for the central bank to lower interest rates.
“NO INFLATION, THE FED SHOULD LOWER ITS RATE!!!” Trump said Friday on his Truth Social platform.
The president cited in his post that employment is “strong,” a possible reference to a new report Friday showing the US economy added 177,000 nonfarm payrolls in April, more than the 138,000 expected by economists. The unemployment rate also held steady at 4.2%.
That resilience likely won’t force the Fed to change its current stance that it needs more clarity on how Trump’s tariffs will affect the economy in the months ahead. Traders on Friday bet that any near-term rate cuts are now less likely.
Read more: The latest news and updates on Trump’s tariffs
The market doesn’t expect any action at the Fed’s meeting next week on May 6-7, and traders reduced the odds of a cut at the June meeting to less than 50-50. Traders also retreated from bets of four more cuts by year-end.
President Trump has made his views known in recent weeks: He wants rates lowered, and he is not happy with the caution of Fed Chair Powell, who has said the central bank will “wait for greater clarity” while weighing both sides of its mandate for stable prices and full employment.
Read more: How much control does the president have over the Fed and interest rates?
There is a “strong likelihood,” Powell said last month, that the economy will be moving away from both of the Fed’s goals for the “balance of the year, or at least not making much progress.”
Trump argued in his post Friday that some prices and borrowing costs were down: “Gasoline just broke $1.98 a Gallon, lowest in years, groceries (and eggs!) down, energy down, mortgage rates down.”
“Consumers have been waiting for years to see pricing come down.”
An inflation gauge favored by the Fed did show this week that price growth slowed in March to an annualized 2.6%, but it was still 3.5% for the full first quarter.
Both are above the Fed’s target of 2%.
Other data released this week reinforced the Fed’s conundrum. The US economy contracted for the first time in three years to start 2025 due largely to a rush by importers to beat the start of President Trump’s tariffs.
Economists are still concerned that the economic picture may look very different in several months as more of Trump’s tariffs bite.
“I would worry that things could change very quickly,” Citigroup economist Veronica Clark told Yahoo Finance Friday.
And that could still force the Fed to act by lowering rates, if the economy worsens.
Read more: 5 ways to tariff-proof your finances
Brian Jacobsen, Annex Wealth Management chief economist, told Yahoo Finance on Friday that he expects the Fed to cut rates by the summer as it gets more data showing a weakening.
“It’s just going to take a little more time.”
Overall, immediate political reaction was muted as the jobs report offered minimal ammunition for either side of the political divide.
“This is the second month in a row where the jobs report has beat expectations,” offered Trump press secretary Karoline Leavitt. “This is exactly what we want to see.”
“Today’s jobs data shows the labor market is still slowing down,” shot back Sen. Elizabeth Warren of Massachusetts in a statement largely focused on Wednesday’s GDP numbers and inflation.
Daniel Hornung, who served in Joe Biden’s National Economic Council, called the Friday release a “a wait-and-see employment report.”
“The questions now are how soon tariffs and DOGE cuts more meaningfully weigh on employment growth, and whether the administration reverses its tariff policies through trade deals quickly enough to prevent a much more substantial labor market slowdown.”
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