The US labour market showed signs of a steady slowdown in October, with job openings increasing moderately and layoffs declining, according to the latest Job Openings and Labor Turnover Survey (JOLTS) report released by the Bureau of Labor Statistics on Tuesday. Job openings, a key indicator of labour demand, rose by 372,000 to 7.744 million at the end of October. However, the September figures were revised downward to 7.372 million from the initially reported 7.443 million. Economists polled by Reuters had anticipated 7.475 million vacancies. Labour Market Dynamics While job openings increased, hires dropped by 269,000 to 5.313 million, and layoffs fell by 169,000 to 1.633 million. These figures suggest a gradual cooling of the labour market rather than a sharp contraction. Hurricanes and strikes also impacted October’s labour market data. Rebuilding efforts in storm-affected regions and the resolution of strikes at Boeing and another aerospace company are expected to contribute to a ...
The Federal Reserve is expected to hold its benchmark interest rate steady this week while signaling a potential rate cut in September, moving closer to reducing rates from their highest level in two decades.
Key Points:
- Current Rate: The Fed's Federal Open Market Committee (FOMC) is anticipated to keep the benchmark rate in the range of 5.25% to 5.5%, where it has remained for a year.
- Inflation Progress: Policymakers are likely to acknowledge progress towards the 2% inflation target, essential for considering rate cuts. Recent consumer price data for June showed promising signs.
- Unemployment Concerns: With unemployment rates slightly increasing, the Fed may suggest that less restrictive policies are soon appropriate.
- Language Shift: The Fed might update its statement to reflect confidence in inflation nearing the 2% goal, potentially hinting at imminent rate cuts.
Economists' Insights:
Subadra Rajappa of Societe Generale anticipates a change in the Fed’s language to suggest a cut in September, referencing recent remarks by New York Fed President John Williams about moving away from restrictive policies.
Rate Decision:
All surveyed economists expect no rate change this meeting. The FOMC might highlight improved inflation prospects in their statement, indicating confidence in reaching the 2% target and signaling upcoming rate reductions.
Discussion on Rate Cuts:
While a rate cut this week is unlikely, it may be discussed. Prominent voices, including former Fed officials, have recently supported a July rate cut. Chicago Fed President Austan Goolsbee might dissent, advocating for an immediate cut.
Press Conference Expectations:
Fed Chair Jerome Powell will likely be questioned on September's outlook and the pace of easing for the rest of the year. He is expected to reiterate that policy decisions will be "data dependent" and made "meeting by meeting." Powell may also address concerns about the cooling labor market, noting the rising unemployment rate, now at 4.1%.
Investor Sentiment:
Investors are pricing in a quarter-percentage point cut for September and anticipate further cuts in November and December, according to futures.
Derek Tang of LH Meyer/Monetary Policy Analytics expects Powell to clarify what level of economic weakening would prompt the Fed to reconsider its current pace of rate cuts.
Political Neutrality:
Powell is expected to maintain that the Fed's decisions are unaffected by political considerations, even if asked about the upcoming presidential election.
Conclusion: As the Fed prepares to announce its decision, all eyes are on potential signals for a September rate cut, amidst a backdrop of improving inflation data and a slightly cooling labor market.
Comments
Post a Comment