Soft August jobs report could sway fed to deliver supersized rate cut in September
Investing.com -- Expectations for a supersized rate cut in September has been running out of steam as recent economic data defogged the economic outlook showing that recession fears were much ado about nothing, but with the labor market now in the monetary policy driving seat, the August jobs report has the potential to revive bets on a big September rate cut.
A 50 basis point rate cut could be sanctioned by Fed officials if the unemployment rate stays at 4.3% or moves higher, Citi estimates, and may even be possible if the unemployment rate drops just 0.1%. "The most concerning sign is the rise in the unemployment rate to 4.3% from a low of 3.4%," Citi said, though the recent jobless claims data, which have been dropping over the last two weeks, raises"expectations that the soft jobs report in July may have been 'transitory.'"
"Since the policy action in September depends on data not yet released, Powell is unlikely to provide clear guidance toward a 25bp or 50bp cut," they added,
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