Daijiworld Media Network - Washington

Washington, Jan 9: A decline in the US unemployment rate has eased concerns at the Federal Reserve over labour market weakness, strengthening expectations that the central bank may hold interest rates steady for a longer period, with traders now betting that rate cuts are more likely to resume in June.

According to data released by the US Labor Department on Friday, the unemployment rate fell to 4.4 per cent in December from a revised 4.5 per cent in November. However, job growth remained muted, with employers adding just 50,000 jobs during the month, far below market expectations.

Despite the slowdown in monthly job creation, the improvement in the jobless rate has given the Federal Reserve more room to keep short-term borrowing costs unchanged as it awaits clearer signals on inflation trends. Last year, the central bank cut policy rates by a total of 0.75 percentage points to prevent further softening in the labour market, even as some policymakers cautioned that easing too early could derail progress in controlling inflation.

Following the jobs data, short-term interest rate futures declined, reflecting shifting market expectations. Traders now see only a 45 per cent chance of a rate cut by April, down from roughly even odds prior to the report, while a June rate cut is increasingly viewed as the most likely scenario.

The data suggests that while hiring momentum has slowed, the labour market remains resilient enough for the Federal Reserve to maintain its cautious, data-driven approach in the coming months.