Fed: It is possible to raise interest rates again before the end of the year

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U.S. job growth exceeded expectations in September. Economists at Wells Fargo said that after the NFP, the FOMC will closely monitor the Consumer Price Index (CPI) and Employment Cost Index (ECI).

The report drove another rise in Treasury yields and added fuel to the fire that the FOMC may raise the federal funds rate again at one of its two remaining meetings this year.

Another rate hike before the end of the year is possible, but for now, our base case remains that the last hike in the tightening cycle occurs in July.

The earnings data in the jobs report is a slightly crude measure of wages, so the Employment Cost Index (ECI), due out on October 31, will be critical in confirming whether labor costs are indeed decelerating. If the CPI and ECI data cooperate, we expect the FOMC to remain on hold at its upcoming meeting on November 1.