Fed officials aren’t bent on slowing the job market — but they’re watching it.

Federal Reserve officials left interest rates unchanged this week and signaled that their next move is likely to be a cut. As they contemplate when to lower borrowing costs, incoming data on the labor market is likely to remain in focus.

Jerome H. Powell, the Fed chair, made it clear during his news conference on Wednesday that the central bank is not bent on keeping interest rates high just to slow down the labor market. Fed officials are happy to see employers hiring and wages rising as long as inflation is still coming down, Mr. Powell said.

On the other hand, a cooling in the job market could spur the Fed to lower interest rates sooner rather than later.

“If we saw an unexpected weakening in, in certainly in the labor market, that would certainly weigh on cutting sooner,” Mr. Powell said.

But for now, job gains have continued at a solid pace and the economy is growing at a rapid clip. If that continues, the Fed is likely to focus more on inflation as it contemplates when and how much to lower rates. The central bank’s policy rate is now set to 5.25 to 5.5 percent, a level high enough that economists think it will cool the economy as it trickles through financial markets and weighs on mortgage, credit card and business borrowing.

Mr. Powell suggested that the Fed would like to see more evidence that inflation is coming under control before it begins to lower borrowing costs, and that it was unlikely to have enough data to feel confident in that before the central bank’s next meeting in March.

Notably, Mr. Powell suggested that the Fed is willing to be patient as it waits for wage growth to slow to normal levels. Some economists think that today’s relatively quick pace of wage gains could prevent inflation from stabilizing at 2 percent over time, were they to prevail.

“I think the labor market by many measures is at or near normal, but not totally back to normal,” Mr. Powell said. “Job openings are not quite back to where they were,” and wage increases “are not quite back to where they were.”

He added that wage increases “probably will take a couple of years to get all the way back, and that’s OK.”


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