Markets have anticipated such Fed action for months, but rate cut speculation increased after a disappointing July labor market report showing rising unemployment and slowing job growth. During that same month, inflation fell below 3%.1 Fed Chair Jerome Powell appeared to confirm the Fed’s September plans, saying in late August “The time has come for (interest rate) policy to adjust.” Powell noted that, “The upside risks to inflation have diminished. And the downside risks to employment have increased.”2
“Investor expectations have really consolidated around a rate cut being priced into the Fed’s September meeting,” says Bill Merz, head of capital markets research at U.S. Bank Wealth Management. “We’re seeing signals from asset prices confirming a broader, gradual deceleration of the fed funds rate as well as a focus on worldwide rate cuts,” from other central banks.
“Investor expectations have really consolidated around a rate cut being priced into the Fed’s September meeting,” says Bill Merz, head of capital markets research at U.S. Bank Wealth Management. “We’re seeing signals from asset prices confirming a broader, gradual deceleration of the fed funds rate as well as a focus on global rate cuts,” from other central banks.