 "‘It turns bad fast’: Fed officials worry US jobs market, Trump’s rate cut wish may come true soon")
Many US Federal Reserve officials have cited concerns about the labour market to indicate that rate cuts — that President Donald Trump has been pushing for— are likely in the coming weeks. The Fed will meet on September 16-17, and decisions are due to be announced on Sept. 17.
In recent months, the jobs growth as well as the economy in general has been on a downward trajectory largely as a result of Trump’s policies of tariffs, immigration crackdown, and mass firings of government workers and cancellation of contracts. This has raised recession odds.
Amid such deflationary pressures, Federal Reserve Governor Christopher Waller told CNBC, “I’ve been clear that I think we should be cutting at the next meeting. You want to get ahead of having the labour market go down because usually when the labor market turns bad, it turns bad fast.”
Waller, however, said that the rate cate should not be expected in the Sept. 16-17 meeting, but “multiple cuts” should be expected in three to four months.
Separately, Atlanta Fed President Raphael Bostic said that a rate cut is in the cards but did not give a timeline. He cited jobs market as the reason for cuts.
Bostic wrote in an essay cited by Reuters, “While price stability remains the primary concern, the labour market is slowing enough that some easing in policy —probably on the order of 25 basis points— will be appropriate over the remainder of this year.”
Impact Shorts
More ShortsHowever, there are concerns among some in the Federal Reserve that rate cuts could worsen inflation. In July, core inflation rose at the fastest rate in six months.
For months, some economists have warned that the joint outcome of Trump's policies could be 'stagnation', a situation where inflation and recession coexist. Mark Zandi, the Chief Economist at Moody’s, has said that a third of US states are already in recession. Moody’s has also raised odds of a recession in the United States as a whole in the next 12 months to 49 per cent.
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