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Falling Unemployment Could Pressure Fed to Move Faster on Rates

May 4, 2018

Markets have watched monthly employment reports over the last few years for signs that job gains would permit the Fed to gently raise interest rates.

Friday’s jobs report illustrates the challenge the Federal Reserve faces this year as the economy enters a more delicate phase for setting interest-rate policy. It also shows why officials are split over whether to raise rates three or four times this year after raising them three times last year, writes the Wall Street Journal’s Nick Timiraos.

The latest employment report released Friday by the Labor Department puts a point on that question. The unemployment rate dropped to 3.9% in April after holding at 4.1% for the prior six months, and employers added 164,000 jobs. The last time unemployment stood at a lower level was April 2000.

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