Standard Chartered Bank has forecast that the US Federal Reserve is likely to cut interest rates by 50 basis points next week, citing fresh labor market data that showed a slowdown in hiring.
According to Bloomberg, the bank’s economists argued that the weaker-than-expected jobs report highlights the fragility of the US economy and strengthens the case for a more aggressive monetary easing stance.
The Wall Street Journal reported that non-farm payrolls for August came in significantly below market expectations, with unemployment ticking higher and wage growth moderating.
Analysts at Standard Chartered said these figures reflect a cooling labor market that could undermine consumer spending, a key driver of the US economy. They noted that without decisive intervention, the risk of a sharper downturn could increase.
Reuters noted that markets have already begun pricing in a half-point cut, with bond yields falling and equities gaining on the expectation of cheaper borrowing costs.
Traders now believe the Fed will move swiftly to counter economic headwinds, especially as concerns about slowing global growth and geopolitical uncertainties add to pressure on the US economy.
According to CNBC, Standard Chartered emphasized that a 25 basis point cut may not be enough to reassure markets or offset the impact of weaker data.
The bank suggested that a stronger policy response would demonstrate the Fed’s commitment to sustaining growth and stabilizing financial conditions.
While some policymakers remain cautious about deeper cuts, the debate is intensifying ahead of the Federal Open Market Committee meeting. Standard Chartered’s projection aligns with growing calls from investors and economists who argue that a more aggressive approach is needed to prevent recessionary risks from taking hold.
Source: Reuters
Written By Ian Maleve
