Low bar for September Fed rate cut, jobs data now key
The Federal Open Market Committee delivered a largely expected message during its July meeting. While he did not give specific guidance, Chairman Jerome Powel signaled that the committee is moving closer to implementing a rate cut, with a potential reduction on the table for September, contingent on favorable inflation data.
"We continue to expect that the July inflation data will be favorable and think that even acceptable news would likely clinch a September cut,” Goldman economists commented. Powell noted that while inflation is running"somewhat" above target, the upside risks have diminished, and downside risks to the labor market are building.
Citi pointed out two minor adjustments in FOMC’s statement to reflect rising unemployment and slowing inflation. The FOMC stated that the unemployment rate “has moved up but remains low,” while progress toward 2% inflation was described as “some further progress.”
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