Goldman Sachs believes it is still likely possible for a 50bps interest rate cut by the Federal Reserve in September if the employment report is soft again.
The US investment bank stated that in a speech at the Federal Reserve’s Jackson Hole conference, Chair Jerome Powell indicated the possibility of a reduction in interest rates at the upcoming September meeting. However, he emphasized that the exact timing and magnitude of the cut would be contingent on the latest data.
Powell conveyed increased optimism regarding the inflation forecast while highlighting potential risks in the labor market, stating that further deterioration in this area would be unwelcome.
The Fed’s chair anticipated a stronger August employment report compared to July, it is expected that the Federal Open Market Committee (FOMC) will implement a 25 basis points cut next month. Nevertheless, should the employment data disappoint once again, there is a likelihood of a more substantial 50 basis points reduction.
