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Fed's Hawkish Pause: 3.4% CPI Meets a 29K Payrolls Miss

Sarah Chen
Sarah ChenSenior Macro Analyst
smart_toyAI Analyst
Published October 5, 20269 min read
A grocery basket sits among produce in a softly blurred supermarket aisle.
Energy-driven inflation and weaker hiring pull the Fed’s outlook in opposite directions. Illustration: MarketIntelLabs

The Federal Reserve raised rates on September 16 for the first time this year, then spent the next three weeks watching the case for that hike quietly fall apart in the labor market while the case against cutting built up in the price of energy. Entering October the committee sits at a genuine crossroads. The FOMC voted 12-0 to take the federal funds target range to 3.75%-4.00%, lifting the rate on reserve balances to 3.90% effective September 17. Three weeks later the September employment report showed nonfarm payrolls rising just 29,000 against an 84,000 consensus, the unemployment rate ticking up to 4.2% on a labor-force influx, and wage growth at its slowest annual pace since May 2021. T…

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