The Chance of Faster Interest Rate Cuts in the USA Increases

The concern for the situation in the American economy is growing. The probability of a more aggressive pace in the cuts of the interest rate is increasing, according to the pricing on the interest rate market.

» Updated:

» Published:

The Chance of Faster Interest Rate Cuts in the USA Increases
Photo: Jose Luis Magana/AP/TT

Share this article

The Federal Reserve Chairman Jerome Powell sent clear signals on Wednesday that a first interest rate cut is possible in September.

However, fresh figures on the labor market and industry have created concern among investors that the inflation-dampening monetary policy is too tight – and that the Fed is acting too slowly to ease.

The market has priced in three consecutive cuts of 0.25 percentage points each during the second half of the year.

Now, the probability is increasing that the Fed will also need to make a double cut, with 0.50 percentage points, at one of its three upcoming rate-setting meetings – September, November, and December. The probability of this is currently 50 percent.

This would mean a reduction of the key interest rate – which has been in the range of 5.25-5.50 percent for a year – by a total of one percentage point this year.

Statistics showed on Thursday that the number of unemployed in the US increased more than expected, while the purchasing managers' index for the manufacturing industry indicates decreased activity.

Jerome Powell repeated his message on Wednesday that the Fed is data-dependent in its assessments and that the bank's leadership is aware of the risks of slowing down the labor market too much.

Tags

Author

TTT
By TTEnglish edition by Sweden Herald, adapted for local and international readers

More news

Gold Certificate Company Lists on Stockholm Stock Exchange

Gold Certificate Company Lists on Stockholm Stock Exchange

Financial Supervisory Authority Reviews SSAB's 33.3 Billion Kronor Write-Down

Financial Supervisory Authority Reviews SSAB's 33.3 Billion Kronor Write-Down

Weakening Dollar: Key Considerations for Investors

Weakening Dollar: Key Considerations for Investors

Asian Stock Markets Rise Following Trump's Trade Talks Update

Asian Stock Markets Rise Following Trump's Trade Talks Update

Fed Member Lisa Cook Retains Position Amid Trump's Legal Challenge

Fed Member Lisa Cook Retains Position Amid Trump's Legal Challenge

Tesla Stock Surges 3.6 Percent Boosting Wall Street Indexes

Tesla Stock Surges 3.6 Percent Boosting Wall Street Indexes

Trump Proposes Ending Quarterly Reports for Wall Street Companies

Trump Proposes Ending Quarterly Reports for Wall Street Companies

EU Regulators Seek Stricter Crypto Supervision by ESMA

EU Regulators Seek Stricter Crypto Supervision by ESMA

Elon Musk Buys $1 Billion in Tesla Shares, Boosting Stock by 7%

Elon Musk Buys $1 Billion in Tesla Shares, Boosting Stock by 7%

China Investigates Nvidia for Competition Law Violations

China Investigates Nvidia for Competition Law Violations

USA and China Agree on Tiktok Deal Framework

USA and China Agree on Tiktok Deal Framework

Black Soldier Fly Oil and Protein Developed for Animal Feed

Black Soldier Fly Oil and Protein Developed for Animal Feed

Basmati Rice Dispute Stalls EU-India Trade Agreement

Basmati Rice Dispute Stalls EU-India Trade Agreement

Gaming Companies Lead Gains in Slightly Rising Stockholm Stock Market

Gaming Companies Lead Gains in Slightly Rising Stockholm Stock Market

Sweden Construction Costs Rise 0.4% in August Amid Higher Electricity Prices

Sweden Construction Costs Rise 0.4% in August Amid Higher Electricity Prices

Swedes Report Decreased Satisfaction with Banks This Year

Swedes Report Decreased Satisfaction with Banks This Year

Fashion Trade Sales Rise for Third Consecutive Month

Fashion Trade Sales Rise for Third Consecutive Month

Powell's Rate Signal Influences Swedish Households Too

Powell's Rate Signal Influences Swedish Households Too

Asian Markets Rise Despite Weak China Data

Asian Markets Rise Despite Weak China Data

ANZ Bank Faces Record Fines for Bond Deal Misconduct

ANZ Bank Faces Record Fines for Bond Deal Misconduct