December's jobs report came in hotter than expected with the US adding 216,000 jobs, topping estimates of 175,000. While good news for some, this makes the Federal Reserve's job a bit more difficult in terms of slowing the economy down to rein in inflation. Eugenio Alemán, Raymond James Chief Economist, joins Yahoo Finance to give insight into the jobs report data and how this will affect the Fed's policy decisions going forward.

Aelmán explains : "The jobs market is still very strong. That creates issues for the Fed because it is always the case that the job market could potentially remain too strong for inflation going forward. For now, the signals from inflation is that the disinflationary process is ongoing and will continue, but in order to get to 2% target, the Fed needs to have inflation not to be higher than 0.15 for a sustained period of time. Almost a year with inflation below 0.15% per month and we haven't been able to do that yet."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

JOSH LIPTON: In the Fed's last policy meeting of 2023, policymakers said they would remain careful and data-dependent in assessing policy decisions in the new year. So what does December's hotter-than-expected jobs report signal for the data points that will drive policy decisions in the months ahead? Joining us now to discuss is Eugenio Aleman, Raymond James chief economist.

Eugenio, thank you so much for joining us. You know that the report came in, slightly stronger than consensus, stronger than expected. You've had time to look over the report, Eugenio, look under the hood a bit. What do you make of it?

EUGENIO ALEMAN: Yes. Thank you for the invitation. Yes, the report was much stronger than what we were expecting and what markets were expecting. But if you look at the report, inside the report, I mean, not every sector of jobs is growing. So I mean, the addition to the jobs picture is constrained to or limited to two or three very, very strong sectors, including the US government, which has gone on a hiring spree for the last year or so. So they are enjoying that there's not that much competition, and they are hiring a lot of workers.

JULIE HYMAN: Eugenio, it's Julie here. So when we look at the bigger picture here of what the Fed is going to be doing here, is it going to be focusing now more on the job market and potential slowdown, as we are seeing inflation on this sort of steady relief trajectory?