Federal Reserve's Bold Move: Anticipated Interest Rate Cuts Amid Labor Market Challenges

The Federal Reserve is predicted to cut its key interest rate by 25 basis points on September 17, as the softness in the labor market overshadows concerns about inflation. According to a Reuters poll, a majority of 107 economists foresee this action, with expectations of an additional cut next quarter.

August's stall in job growth, along with a significant downward revision to 12-month job data through March, has prompted economists to forecast more rate cuts than previously anticipated. Market projections indicate a full pricing of a September cut, now expecting three reductions this year compared to earlier predictions of two.

Fed Chair Jerome Powell and other policymakers have suggested easing monetary policy despite inflation risks associated with tariffs. Internal disagreements and President Trump's criticism of Powell, along with his actions regarding Fed governance, further complicate these monetary decisions.

(With inputs from agencies.)