Markets bet on a smaller Fed rate cut despite job market weakness

Standard Chartered now expects the ￰0￱ Reserve to slash interest rates by 50 basis points at its September 17-18 meeting, doubling its earlier forecast of a 25-basis-point ￰1￱ revision follows a weak August jobs report , which revealed a sharp slowdown in payroll growth and pushed the unemployment rate to 4.3% the highest since late ￰2￱ Chartered described the shift as striking, noting that the labor market “turned from solid to soft in under six weeks.” The bank likened the situation to last September, when the Fed implemented a larger-than-anticipated cut to counter slowing ￰3￱ potential rate move is called a “catch-up” effort to ensure policy keeps pace with economic ￰4￱ bet on a smaller Fed rate cut despite job market weakness Financial markets are already betting on a more modest step by the Federal ￰5￱ CME FedWatch Tool indicates a 90% probability of a 25-basis-point cut at next week’s policy ￰6￱ one in 10 anticipate that the Fed will provide the bigger half-point reduction that Standard Chartered ￰7￱ is a sign that investors believe there’s room for some easing, but they are not yet convinced the central bank will act as aggressively as some forecasts ￰8￱ large banks express that ￰9￱ Stanley and Deutsche Bank both admit that the August jobs report showed softness in the labor market, but say it didn’t show weakness, which was too great for the Fed to act with 50 basis ￰10￱ are not anticipating a more aggressive pace of easing, which would likely be delivered over the course of back-to-back meetings so that policymakers can react to incoming data in a more measured ￰11￱ Wall Street firms adjust their predictions based on the latest job ￰12￱ at Barclays now expect the first in a series of 25-basis-point cuts at each remaining Fed meeting this year, suggesting a slow but steady pace of policy easing.

Meanwhile, Macquarie, a major Australian investment bank with a strong global presence, has brought its forecast forward, anticipating the first cut in October rather than ￰13￱ of America has also changed tack, now forecasting 25 basis points of cuts in September and December after earlier saying the Fed would stay on hold through ￰14￱ the same time, the Fed’s chair, Jerome Powell, has sent cautious signals that a cut is on the ￰15￱ has recently conceded that the risks to the job market are edging up, which strengthens the argument for taking the risk of some ￰16￱ he has warned many times that inflation is still a major ￰17￱ balancing act doesn’t afford the Fed much room to maneuver, so markets are pricing in a more modest cut with the potential for a surprise, half-point ￰18￱ decision set to reshape US economy By cutting a 50-basis-point cut, the Federal Reserve would take its most drastic action in a year or ￰19￱ so would signal that policymakers see the threat of a slowing economy as more urgent than the risk of stubbornly resistant ￰20￱ would reveal a central bank ready to act aggressively to support growth and protect jobs, even if at the price of loosening financial conditions faster than markets had ￰21￱ households would benefit, ￰22￱ interest costs could lessen the pain of credit card balances, home mortgages, and car ￰23￱ the effects may not be instantaneous, lower rates generally work their way into the cost of borrowing for consumers over time, putting some cash into families’ pockets at a time when wages are lagging behind rising ￰24￱ seen where it ￰25￱ in Cryptopolitan Research and reach crypto’s sharpest investors and builders.