Oxford Economics indicates that the likelihood of a 50 basis point interest rate cut by the Federal Reserve is increasing. Strong job report numbers are overshadowed by underlying signs of a weakening labor market. Rate cuts could signal either economic recovery or the onset of a downturn if unemployment rises sharply. A 50 basis point cut would only be necessary if companies halt hiring. Despite expecting a smaller cut of 25 basis points, concerns over the labor market's stability are growing.
The chances the Federal Reserve will cut interest rates by 50 basis points in December are growing, according to Oxford Economics. A rate cut of that size would only come if unemployment spiked and companies stopped hiring.
Interest rate cuts could mean the Federal Reserve has deemed the threat of inflation has passed and economic forecasts stable again after tariffs. However, if the labor market deteriorates unexpectedly, a large cut would be necessary.
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