FED RATE CUTS LOOM LARGE AS US JOB MARKET SHARPS SLOWLY
U.S. central bankers may be having second thoughts about their decision earlier this week to hold borrowing costs steady. Employers added just 114,000 jobs in July, the U.S. Labor Department reported, and the unemployment rate rose to 4.3%, from 4.1% in June, marking an unexpected deterioration in a labor market that had held up surprisingly well during the Federal Reserve's aggressive rate-hike campaign in 2022 and 2023.
On Wednesday, when U.S. central bankers opted to keep the central bank's policy rate in its current 5.25%-5.50% range, Fed Chair Jerome Powell said he believed the labor market was in a process of "ongoing, gradual normalization" that allows policymakers to wait a little longer to be sure inflation is beaten before cutting rates. The data prompted traders to pile into bets that the Fed will deliver a half-percentage-point rate cut at its Sept. 17-18 meeting, and drive borrowing costs down further from there, with the policy rate expected to end 2024 in the 4.00%-4.25% range.
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