Live Updates > Live Update Details
2025-09-12 18:02:56
[Interest Rate Cut Signals Already Emerging, Job Market Weakness May Be Key] ⑴ The market generally expects the Federal Reserve to announce an interest rate cut at next week's meeting, with a 90% probability of a 25 basis point cut, signaling a possible shift in monetary policy direction. This expectation aligns with recent weak US employment data and easing inflation concerns. ⑵ Several recent US employment reports have shown signs of weakness, including the August unemployment rate rising to 4.3% and a significant downward revision of nearly 1 million jobs added in the year ending March, far below previous estimates. These data suggest that the US economy may be facing the risk of stagnant growth rather than the previously feared stagflation. ⑶ Institutional analysts point out that the Federal Reserve has shifted its focus from curbing inflation to supporting the job market. The extent of the revision to employment data is particularly noteworthy, especially after Trump's tariff comments sparked market concerns. If this weakness continues, the Fed may need to take more aggressive interest rate cuts. ⑷ Historical data shows that the probability of a 50 basis point Fed rate cut increases significantly during or immediately after a recession. Although the market currently expects a 25 basis point rate cut, if the Fed deems the economic outlook bleak, it cannot rule out the possibility of a larger rate cut. ⑸ Although recent inflation data has been slightly higher than expected, the sharp increase in initial jobless claims suggests that the labor market is cooling. Growth in investment in AI has boosted economic output, but signs of weakening employment growth momentum remain clear, as evidenced by the decline in job vacancies.
