By Kevin Plumberg
NEW YORK, Aug 3 (Reuters) - Investors are now so convinced that the Federal Reserve has completed its interest rate-raising campaign that Friday's U.S. payrolls report could be the over-hyped event of the week.
While an off-the-chart July employment number, one well above the 144,000 median forecast for new jobs, could tip the balance of opinion to the camp that another increase is in the cards, the futures market currently reflects a roughly 50 percent chance of a rate rise next week.
Even if the Federal Open Market Committee does lift the federal funds overnight rate for an 18th consecutive time on Tuesday, Wall Street is firmly of the belief that that will be its last in this cycle, thus muting the potential market impact of Friday's data.
Furthermore, economists say Fed policy makers are less concerned with a single piece of jobs data and are more focused on a trend of slowing economic growth. In that sense, they would like to step back and survey the economic landscape to make sure higher borrowing costs have not had too deleterious of an effect on growth.
"The Fed would like to pause if the data would allow them to do that," Michael Carey, chief economist at Calyon in New York, said of the jobs number.
"You would have to have a pretty strong employment number to disabuse them or their notion going into the meeting that it would be best to pause given the mosaic of data they are looking at," he said.
Indeed, the three-month average for non-farm payrolls growth has been dropping steadily since March, and at 111,300 jobs is at its lowest level of the year.
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