The number of Americans applying for unemployment benefits has increased to its highest level this year, according to recent data on jobless claims. According to another research, US firms reported five-fold increase in the number of layoffs in February compared to the same month last year. In order to reduce inflation, the Fed is relying on higher rates to slow down the labour market.
Even a cooler jobs report on Friday is unlikely to stop the Federal Reserve hiking interest rates further on March 22, warns the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organisations.
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The warning from Nigel Green of deVere Group comes as domestic and global financial markets hold their breath for the monthly US jobs report published on Friday 8:30 a.m. ET by the US Bureau of Labor Statistics.
Green says: “This jobs report is being closely watched by investors around the world, after January’s gave analysts a massive surprise. It revealed the US economy had added more than half a million jobs and unemployment had fallen to a level not seen in more than five decades.
“All eyes are now on the February jobs data. We expect the US to have added around 225,000 in new jobs last month and the unemployment rate to remain at a 54-year low of 3.4%.
As this represents a cooling of the labor market, will the Fed impose only a quarter-point rate hike on March 22, rather than a half-point one?
“I doubt it,” says the deVere CEO. “Even a cooler jobs report on Friday is unlikely to stop the Federal Reserve hiking interest rates further later this month. We would need to have several months of weakening employment in order for the Fed to respond by taking its foot off the gas on rates. As such, we expect a half-point rate hike on March 22. Markets are set to tumble as a result,” adds Green.