The January jobs report revealed a drop in the unemployment rate to 4%, accompanied by payroll gains of 143,000. A Fed interest rate cut in March is now very unlikely.

Traders of short-term interest-rate futures on Friday now expect the Federal Reserve to cut interest rates just one time this year, backing away from earlier bets on two rate cuts starting in June, after government data showed the labor market remains strong and a closely-watched survey showed a jump in consumers' inflation expectations.

The U.S. economy added a smaller-than-expected tally of new jobs last month, but a sharp jump in wage growth and revisions tied to population changes and immigration make for a noisy report that might not indicate broader strength in the labor market.

Faced with a solid economy and mounting inflation concerns, the U.S. central bank has said it will “move cautiously” on cutting interest rates.

Tariffs on U.S. goods and services may complicate the Federal Reserve’s decision making as market expectations for 2025 interest rate cuts decline.

The Federal Reserve on Wednesday hit pause on interest rate cuts in its first key decision of President Donald Trump’s second term.

Bowman said on Friday she expects declining inflation to allow further interest rate cuts this year, but feels many factors could slow the process.

After three successive interest rate cuts, the Federal Reserve on Wednesday made no change in its benchmark lending rate amid new economic uncertainties over the outlook for inflation and President Trump's continued threats of new tariffs and other measures.