BofA "If December unemployment rate is 4.5%, Fed may keep rates on hold"

An analysis suggested that U.S. December employment data could be a factor in keeping the Federal Reserve (Fed)'s interest-rate hold stance. If the unemployment rate remains at its current level or falls slightly, the possibility of additional rate cuts is expected to be limited.

On the 5th (local time), according to economic breaking channel Walter Bloomberg, Bank of America (BofA) expects nonfarm payrolls to increase by 70,000 in December. This exceeds the market consensus of 54,000, and employment gains in the education and healthcare sectors were analyzed as the main driver.

BofA said the December unemployment rate is likely to fall slightly from November's 4.6% to 4.5%. In that case, it explained, it would be interpreted as a sign that the labor market remains resilient, increasing the likelihood that the Fed will maintain its decision to keep rates on hold for the time being.

However, it added that if the unemployment rate rises to 4.7% or higher, it could be seen as a signal of labor market slowing, and discussions of rate cuts could resurface. But BofA's baseline scenario is that there will be no further rate cuts under Chair Jerome Powell.

Markets view this employment data as a key variable in gauging the Fed's monetary policy direction, and sensitivity to changes in the unemployment rate has increased.