Jobs Report Gives Ammunition to Both Sides of Fed Rate Debate

04-Sep (New York Times) — Despite disappointing job growth last month, the unemployment rate fell to its lowest level since early 2008, sharpening the debate within the Federal Reserve over whether to raise interest rates when policy makers meet in two weeks.

Friday’s report from the Labor Department — which estimated that employers added a less-than-expected 173,000 jobs in August even as the official jobless rate dipped to 5.1 percent — provided evidence for both camps to make their cases.

The slowdown in job growth and the absence of any significant wage pressure could strengthen the arguments of those who see little risk in keeping monetary policy accommodative and waiting not just for more positive data but also for unruly markets to settle down.

On the other side, there were enough positive indicators to keep a September tightening in play, even as Wall Street turns more attention to the possibility of a Fed move in October or at the central bank’s last meeting of the year, in December.

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