The US Federal Reserve is widely expected to cut interest rates for the first time this year. The anticipated cut, predicted to be a quarter of a percentage point, would bring the federal funds rate to between 4 per cent and 4.25 per cent. The move is designed to address the notable decline in the US jobs market.
Ten Cap chief investment officer Jason Todd anticipates that Federal Reserve chairman Jerome Powell’s upcoming statement will echo his previous address at Jackson Hole. In that speech, Powell acknowledged the central bank’s complex dual mandate of maintaining maximum employment while ensuring price stability.
Todd suggests that Powell will likely convey that the Fed recognises the need for a more accommodative policy in light of the weakening labour market. However, he expects Powell to emphasise that the path forward will remain data-dependent due to persistent inflation.
According to Ten Cap, an Australian investment management firm, a statement that does not indicate further rate cuts in future meetings may be viewed unfavourably by the market.
