By Ann Saphir and Howard Schneider
(Reuters) -Federal Reserve policymakers weighing when to start interest-rate cuts got fresh reasons on Friday to remain on standby, after a government report showed robust job growth in February but also signs of labor market cooling that could help the Fed's battle with inflation.
U.S. employers added 275,000 jobs last month, a Labor Department report showed on Friday, handily beating the 200,000 that economists expected.
But the report's revisions of prior months' estimates showed smaller job gains in January and December than had earlier been thought, and other details of the report suggested a rebalancing in the labor market continues.
The U.S. unemployment rate rose to 3.9%, its highest in two years, though still below levels the Fed sees as sustainable in the long-run.
And wage growth has continued to edge down, rising 4.3% in February from a year earlier, down from 4.4% in January. Fed policymakers won't see that growth as consistent yet with their 2% inflation goal, but it is moving in the right direction.
In testimony on Capitol Hill this week, Fed Chair Jerome Powell said he feels the economy is healthy and policymakers are «not far» from having enough confidence on inflation's downward direction to start reducing interest rates.
Friday's report showing the labor market is still strong but easing slowly «will provide reassurance to the Fed that real economic conditions remain broadly consistent with inflation converging durably towards 2%, and it will be appropriate to cut by June,» said Evercore ISI's Krishna Guha.
Futures contracts that settle to the Fed policy rate now point to about an 80% chance the Fed will start cutting interest-rates by mid-June, with a little more
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