Will NFP force the Fed to hike rates?

The September Fed meeting is approaching rapidly. 16 September is a date marked with a big red exclamation mark in investors' calendars.

While many nuances will matter, there is one key question: will the committee decide on its first interest rate hike in over 3 years? The market-implied probability of such an event can currently be compared to a coin toss, which means that any statements from policymakers and the publication of top-tier macroeconomic data could lead to above-average market volatility.

Last Friday, Governor Warsh's comments in Jackson Hole boosted bets for a hike. Yesterday, Christopher Waller, a member of the FOMC, calmed sentiment with relatively dovish remarks. He stated that the disinflation process is progressing and that core inflation actually looks even better than the main indicators suggest. He noted that if the upcoming CPI inflation reading (scheduled for 11 September) does not come as a negative surprise, he will likely support keeping interest rates unchanged at the next meeting.

Although inflation data dominates the narrative around monetary policy, the importance of key labour market publications remains high, especially given the cooling that the report from a month ago showed. It is worth recalling that the Fed has a dual mandate, which requires both maintaining price stability and maximising employment.

Today is the time for the publication of the most important data from the US labour market.

Latest NFP reading

As a statistical curiosity, it is worth noting that in recent years, the NFP has tended to surprise to the upside – the headline reading (change in non-farm payrolls) turned out better than expected in as many as 34 of the last 50 months.

The last two months have allowed us to forget about this regularity. In July, the data showed a loss of 23k jobs (against a forecasted gain of 80k). June was also disappointing (49k vs. 107k). The 3-month moving average fell to just 20k.

Figure 1: NFP – Number of New Jobs in Non-Farm Sectors (2003 - 2026)

Source: XTB Research, 04.09.2026

What will investors pay attention to today?

Today, attention may focus on the unemployment rate, which seems to be the preferred metric for the labour market situation among many FOMC policymakers. It should remain at an unchanged (and relatively low) level of 4.1%. An increase could spark concern and limit bets for a quick interest rate hike (even with a relatively strong headline NFP reading).

Wage dynamics will also arouse curiosity. If, as expected, they slow to 3% annually, expectations for monetary tightening in the autumn may also fall. Data lower than expected would heighten fears about the American consumer, which are already quite pronounced. Consumption is largely taking place at the expense of savings (the savings rate has fallen to just 3%), and its growth is very uneven. Inflation-adjusted consumption growth among the top quintile (20%) of earners in the US reached 3.8% in Q1. In the rest of the population (80% of citizens), it essentially stood still (+0.6%).