Fed Rate Cut Predictions Surge After Powell's Jackson Hole Speech
Major brokerages anticipate a 25-basis-point rate cut by the U.S. Federal Reserve in September, following Chair Jerome Powell's speech at Jackson Hole highlighting labor market risks. Powell's remarks led Barclays and others to adjust their rate cut forecasts, citing a shift in the Fed's reaction to economic data.
Major brokerages, such as Barclays, BNP Paribas, and Deutsche Bank, are now predicting a 25-basis-point rate cut by the U.S. Federal Reserve in September. This shift follows Federal Reserve Chair Jerome Powell's remarks at the Jackson Hole symposium, where he highlighted increased risks in the labor market.
Powell emphasized a change in the Fed's response strategy, prioritizing labor market concerns. In response, Barclays has moved its expected September 2026 rate cut forward to September 2025. BNP Paribas economists, led by Calvin Tse, have reversed their stance, now forecasting cuts in both September and December.
Despite this, Bank of America advises against rate cuts this year, warning of policy errors without significant labor market deterioration. Markets currently price an 87% chance of a September rate cut, as indicated by the CME FedWatch Tool, supported by similar expectations from Goldman Sachs and J.P. Morgan.
(With inputs from agencies.)
Google News