While the stock market witnessed a solid start to this year, surprisingly strong jobs data is raising concerns about aggressive Federal Reserve action. U.S. job growth accelerated sharply in January, with nonfarm payrolls surging by 517,000 jobs, well above the estimate of 185,000. The unemployment rate hit a more than 50-year low of 3.4%.
According to Morgan Stanley’s latest research note, the Federal Reserve will likely raise interest rates by another 25 basis points at the March policy meeting. The firm also raised the peak Fed funds rate to 4.875% from a previous estimate of 4.75% and sees the first rate cut in December 2023.
