The Federal Reserve is unlikely to raise interest rates in the near term after weaker-than-expected U.S. jobs data, with lower oil prices and easing tensions in the Middle East helping to keep inflation concerns in check, analysts say. Job creation in the U.S. economy has cooled sharply heading into the summer, according to data released Thursday by the Bureau of Labor Statistics. Nonfarm payrolls for June increased by a seasonally adjusted 57,000, below the downwardly revised 129,000 added in May and missing the Dow Jones consensus forecast of 115,000. “Weak jobs numbers would normally be a key reason for central banks to consider cutting rates to stimulate the economy,” said Dan Coatsworth, head of markets at AJ Bell. However, lower oil prices have eased concerns about inflationary pressures and raised market optimism that interest rates will not have to rise for now, Coatsworth noted, adding that the latest jobs data “now feeds into that equation.” “We expect an extended period of policy pause through 2026 before the Fed resumes easing in 2027 (with two rate cuts in late 2Q27 and late 4Q27),” according to a report by Singapore’s United Overseas Bank. UOB added that it still expects “a materially long pause even as we keep our view of an easing stance for Fed policy.” Regional CIO at UBS Global Wealth Management, Yifan Hu, also shared a similar view that a Fed Hike is unlikely for now. “We think the Fed will watch and see, so we think that this year the Fed will not hike rates, ” Hu told CNBC’s ” The China Connection “, adding that there could be scope for the Fed to cut rates next year, potentially as early as the first quarter. — CNBC’s Jeff Cox contributed to the story.
