Weak Jobs Data Fuels Fed Rate-Cut Uncertainty

U.S. job growth slowed sharply in July, with only 73,000 jobs added, significant downward revisions to prior months, the three-month average dropping to 35,000, and the unemployment rate rising to 4.2%. The unexpectedly weak jobs report intensified debate within the Federal Reserve, as Governors Christopher Waller and Michelle Bowman dissented from the decision to hold interest rates steady and advocated for gradual cuts to counter rising labor market risks. Stock markets reacted negatively, and market expectations for a September Fed rate cut increased markedly. President Trump, who recently imposed sweeping new tariffs, has continued to pressure Fed Chair Jerome Powell to cut rates more aggressively, blaming high interest rates for harming consumers and the economy. Waller and Bowman argue that tariff-driven inflation is likely temporary, but the broader Fed remains cautious about cutting too quickly. The combination of weak labor data, trade tensions, and policy disagreements has heightened uncertainty about the direction of U.S. monetary policy.