Latest jobs report “superb”; more interest cuts before Investing.com

Investing.com — A September jobs report is “superb” and more such data could boost hopes that the U.S. economy is at full employment with low inflation, according to the president of the Federal Reserve Bank of Chicago , Austan Goolsbee.

However, in an interview with Bloomberg TV on Friday, Goolsbee signaled that a broad set of measures indicated that the labor market was still cold, while there were signs that inflation could exceed the Fed’s stated 2 percent target.

He added that the central bank’s policy rate remains well above a possible “fixation point” and will likely need to be cut over the next year to a year and a half.

The comments come after US employment growth was much stronger than expected in September, weighing on bets for another jumbo interest rate cut by the Federal Reserve at its final two meetings of the year.

The US economy added 254,000 jobs last month, up from an upwardly revised figure of 159,000 in August, according to a closely watched Labor Department report on Friday. Economists had anticipated a figure of 147,000.

Meanwhile, the unemployment rate fell to 4.1 percent. Forecasts saw the figure equal to August’s pace of 4.2%.

Average hourly wages rose 0.4% on a monthly basis, faster than forecasts of 0.3% but slightly slower than August’s upwardly adjusted 0.5% mark.

Analysts at ING said the labor market continues to hold “the key to the pace” of potential future rate cuts, particularly as inflation — once the focus of a series of aggressive increases in borrowing costs at the Fed — – shows signs of decline.

Fed Chairman Jerome Powell signaled earlier this week that the central bank would likely opt for more traditional cuts of a quarter point, but stressed that the future path of rates is not predetermined.

Powell added that the rate-setting Federal Open Market Committee was in “no rush to cut rates quickly,” despite announcing a whopping 50 basis point cut at its Sept. 17-18 meeting.