New data confirming that the world’s largest economy is cooling has given the US Federal Reserve room to hold interest rates steady, economists say, even as it leaves open the possibility of resuming a historic monetary tightening campaign later in the year.Friday’s US jobs report — which showed the unemployment rate ticked up in August while a healthy 187,000 jobs were added — marked the latest evidence this week that the economy, while still resilient, is beginning to cool as consumers and businesses confront higher borrowing costs.

The new data comes just three weeks ahead of a crucial Fed policy meeting when chair Jay Powell and officials will decide whether they have squeezed the economy sufficiently to bring historically high inflation back under control, after raising the benchmark interest rate to a 22-year high.

The Fed is widely expected to waive an interest rate increase at the September gathering, leaving the federal funds rate between 5.25 per cent to 5.5 per cent.