Fed closer to 'monetary Y2K,' but not there yet

Friday's job report: By the numbers

The last of the big economic data points is in. Now it's up to the Federal Reserve to start sending clear signals to the financial markets regarding its interest rate intentions at its meeting later this month.

Market confusion over the course of policy itself could be the Fed's biggest enemy at a time when markets are in flux and volatile. Investors are concerned over how and when the central bank will proceed amid a flurry of mixed signals.

"The heightened uncertainty about whether the Fed will go in September was not what the Fed was hoping for," Ryan Sweet, an economist at Moody's Analytics, said in a phone interview. "They've had September circled for some time. The plan was in late August to start signaling that they're going. The last thing they want to do is surprise markets. From a communication perspective, September is much more difficult than the Fed was hoping it would be."

Friday's nonfarm payrolls report showed the economy created 173,000 jobs in August, a number less than expected but likely to be revised substantially higher in the months ahead if historical trends hold. Other recent U.S. data points show an economy on the mend, though third-quarter gross domestic product appears to have slowed quite a bit.

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Sweet still thinks the Fed will lift off this month, but he makes way for the possibility that the uncertainty could lead to a further delay. Should the Federal Open Market Committee move on rates at the Sept. 16-17 meeting, he expects Chair Janet Yellen to signal a "one and done" approach that will see a single rate hike this year then no further moves until sometime in 2016.