The Federal Reserve said Friday in a report to Congress that the U.S. labor market is back in the "tight but not overheated" situation it was in before the COVID pandemic threw the economy into disarray.

As unemployment ticks up and wage growth cools, Federal Reserve officials are watching for signs that the job market is about to crack.

Jerome Powell is likely to tell lawmakers that Federal Reserve officials need further confirmation inflation is slowing before they’re in a position to cut interest rates, even with evidence building of softer growth and employment.

Fed policy disproportionately impacts the housing market more than other sectors of our economy and the question is: Are they ready to pivot?

Inflation is easing and the job market has returned to the "tight but not overheated" situation seen before the COVID-19 pandemic threw the U.S. economy into disarray, the Federal Reserve said on Friday in a congressional report that documented the steady emergence of more normal conditions in the aftermath of the health crisis.

The June jobs report showed unemployment approaching a three-year high and raised the pressure on the Fed to act on rate cuts in September.

The economy appears to have caught enough of a chill that the Federal Reserve is likely to cut interest rates soon.

By Ann Saphir (Reuters) -Federal Reserve policymakers got more evidence of U.S. labor-market cooling on Friday that could boost their confidence they are winning their fight on inflation, and open the path to a more active debate on interest-rate cuts when they next meet in late July.

June payrolls were solid, but down slightly from May, while wage inflation slipped a few notches. Both continued trending toward what Powell has called ‘sustainable’ levels.

Gold futures extended recent gains to jump to six-week highs Friday, as the June jobs report that showed an increase in the unemployment rate to 4.1% was seen as a sign that high interest rates are slowing down the economy.