What did the August jobs report show?

The August jobs report showed that the U.S. economy added only 22,000 jobs, well below expectations of 75,000, and the unemployment rate ticked up to 4.3%.

What are economists predicting the Fed will do in September and October?

Economists are now fully convinced the Fed will cut rates in September, likely by 25 basis points, and some expect another cut in October as well to support the slowing economy.

Home / Business and Economy / Fed Signals September Rate Cut Amid Weak Jobs Data

Fed Signals September Rate Cut Amid Weak Jobs Data

Q: How does the Fed Chair Jerome Powell view the economic outlook?

Fed Chair Jerome Powell has signaled openness to easing policy, stating last month that "with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance."

6 Sep

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Summary

Markets price in 92.4% chance of 25-basis-point Fed cut in September
August jobs growth missed expectations, unemployment rate ticked up
Economists expect Fed to cut rates in September and October

Fed Signals September Rate Cut Amid Weak Jobs Data

According to the latest report, traders are now fully expecting the Federal Reserve to cut interest rates in September, with some speculation that the central bank could make a larger 50-basis-point move. This shift in market sentiment comes after the Labor Department reported that the U.S. economy added only 22,000 jobs in August, well below economists' expectations of 75,000. Additionally, the prior two months' job gains were revised lower by 21,000. The unemployment rate also ticked up to 4.3%, the highest since 2021.

While a rate cut is now seen as a near-certainty, the Fed's decision is complicated by persistent inflation concerns. However, Fed Chair Jerome Powell has already signaled openness to easing policy, stating last month that "with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance." The weak August jobs data is expected to provide Powell and other policymakers with the political and economic cover to align with colleagues who have been pushing for a rate cut.

Economists are now fully convinced that the Fed will move in September, although a 50-basis-point cut may be too aggressive. Most analysts expect the central bank to implement a 25-basis-point reduction in September, with the possibility of another cut in October as well. The goal is to support the slowing economy and labor market amid growing signs of weakening demand.

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