Fed’s View of Stabilizing Employment Gets Tested by Surprise Slump

An unexpected hiring slump threatens to upend the prevailing view among Federal Reserve policymakers that a stabilizing labor market will allow them to keep interest rates steady as they fight persistent inflation.

A decline of 92,000 in nonfarm payrolls for February, along with an increase in the unemployment rate to 4.4%, has stoked warnings by economists of a stagflationary cycle as a widening war in the Middle East causes oil prices to surge. Brent crude futures hit $90 a barrel Friday for the first time in almost two years.