The Federal Reserve might actually cut interest rates next week. That’s because the latest jobs report showed weaker-than-expected job growth—177,000 new jobs in April, which is lower than March but still above predictions. Vicky Pryce, an economist at the Centre for Economics and Business Research, said the Fed will be watching these numbers closely. She explained that businesses are holding off on hiring due to all the uncertainty with trade policies and possible tariffs. Companies don’t want to take risks if they don’t know what’s coming.
Vicky also warned that some federal layoffs haven’t even shown up in the jobs data yet, so we could see worse numbers soon. She mentioned instability at big companies like Tesla as another reason businesses are hesitant. Basically, the economy feels shaky, and it’s causing a hiring freeze in many sectors.
The Fed meets next week, and most people still think they’ll keep rates the same. But Vicky thinks a rate cut is very possible because the economy is clearly slowing down. GDP shrank slightly in Q1, manufacturing is struggling, and the services sector isn’t doing much better. Inflation is the main reason the Fed hasn’t cut rates yet—but with the economy weakening, a cut could come soon.
Europe is in a similar situation. Inflation is steady, but growth is weak. Some of the recent boost was just companies rushing to beat tariffs. Now that’s over, and manufacturing is shrinking again. Governments are trying to help with more spending and support, and rate cuts in Europe might come even sooner than in the US. Vicky thinks they’re doing the right thing, since lower rates are already helping boost mortgage lending.
In short: both the US and Europe are likely to see more interest rate cuts soon, as central banks react to a slowing economy and ongoing uncertainty.
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