Traders of short-term interest-rate futures on Friday now expect the Federal Reserve to cut interest rates just one time this year, backing away from earlier bets on two rate cuts starting in June, after government data showed the labor market remains strong and a closely-watched survey showed a jump in consumers' inflation expectations.

The January jobs report revealed a drop in the unemployment rate to 4%, accompanied by payroll gains of 143,000. A Fed interest rate cut in March is now very unlikely.

The central bank is grappling with how quickly to lower interest rates after pausing cuts last month.

The U.S. economy added a smaller-than-expected tally of new jobs last month, but a sharp jump in wage growth and revisions tied to population changes and immigration make for a noisy report that might not indicate broader strength in the labor market.

Even inflation falling close to 2% in the coming months might not necessarily allow the Fed to cut rates soon, Logan said.

Tariffs on U.S. goods and services may complicate the Federal Reserve’s decision making as market expectations for 2025 interest rate cuts decline.

U.S. job growth slowed more than expected in January after robust gains in the prior two months, but a 4.0% unemployment rate probably will give the Federal Reserve cover to hold off cutting interest rates at least until June.