📉 U.S. Labor Market Weakens, Fed Poised for Rate Cuts
According to PANews, Mizuho Bank reports that the U.S. labor market is showing clear signs of weakening, as the August non-farm employment report revealed declines in employment, working hours, and income growth — levels not seen since the pandemic.
The Federal Reserve is now widely expected to cut interest rates at its September meeting. A 25 bps cut appears almost certain, while a 50 bps cut becomes likely if August inflation data comes in softer than expected.
🔎 Key Insights:
The Fed’s past projections on inflation and unemployment have missed the mark.
Policymakers are preparing to launch a sustained easing cycle, aiming to lower rates toward the neutral level of ~3% by March 2026.
The new Fed Chair may push stimulus further, with rates potentially dropping close to 2%.
Risks remain: if inflation resurges, some easing measures could be rolled back by 2027.
The weakening labor data strengthens the case for aggressive rate cuts, marking a potential turning point in U.S. monetary policy.
