Solid Labor Market Gives Fed Cover to Extend Rate Pause

Less than six months ago, Federal Reserve officials were wringing their hands about the state of the labor market.No major cracks had emerged, but monthly jobs growth had slowed and the unemployment rate was steadily ticking higher.

In a bid to preserve the economy’s strength, the Fed took the unusual step of lowering interest rates by double the magnitude of its typical moves.Those concerns have since evaporated.Officials now exude a rare confidence that the labor market is strong and set to stay that way, providing them latitude to hold rates steady for awhile.The approach constitutes a strategic gamble, which economists by and large expect to work out.

That suggests the central bank will take its time before lowering borrowing costs again and await clearer signs that price pressures are easing.“The jobs data just aren’t calling for lower rates right now,” said Jon Faust of the Center for Financial Economics at Johns Hopkins University, who was a senior adviser to the Fed chair, Jerome H.Powell.

“If the labor market seriously broke, that may warrant a policy reaction, but other than that, it takes some progress on inflation.”Across a number of metrics, the labor market looks remarkably stable even as it has cooled.Monthly jobs growth has stayed solid and the unemployment rate has barely budged from its current level of 4.1 percent after rising over the summer.

The number of Americans out of work and filing for weekly benefits remains low, too.“People can get jobs and employers can find workers,” said Mary C.Daly, president of the San Francisco Fed, in an interview earlier this week.

“I don’t see any signs right now of weakening.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access.If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access...