Analysts from two of the largest U.S. banks foresee an imminent interest rate cut from the Federal Reserve.
Following a 50 basis point reduction last month, the Fed is expected to adopt a more measured strategy, with projections for a 25 basis point cut in November.
JPMorgan Chase and Bank of America attribute this forecast to recent signs of economic resilience, including a notable increase of 254,000 in nonfarm employment for September.
Michael Feroli, chief economist at JPMorgan, believes the robust labor market will facilitate the Fed’s decision-making process, suggesting a gradual normalization of rates unless unexpected data emerges in the upcoming jobs report.
BofA’s Aditya Bhave stated that a further 50 basis point cut seems excessive given the strong labor statistics. This sentiment is echoed by New York Fed President John Williams, who considers the U.S. economy well-suited for a soft landing, highlighting the positive trends in employment and declining inflation.
The Bureau of Labor Statistics recently reported a 2.4% rise in the Consumer Price Index over the past year, the smallest gain since February 2021. While Williams supported the September rate cut, he sees the Fed’s dot plot as a reliable guide for future cuts, indicating potential 25 basis point reductions in November and December.
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