"Recent jobs data did not paint the stable picture of the labor market that the Federal Open Market Committee (FOMC) might have been hoping for. The story will likely be the same for inflation data released later this week. While conflicting pressures on both sides of the Fed's dual mandate will make a base rate decision more complex for chairman Jerome Powell and his colleagues, markets are taking it as a win: The Fed may, at last, be forced to cut the base interest rate."
"Markets want to see economic activity fostered by lower borrowing costs. As Professor Jeremy Siegel, of the Wharton School at the University of Pennsylvania wrote for WisdomTree yesterday: "The market got exactly what it needed last week: confirmation that the economy is slowing-not collapsing-and that the Federal Reserve has the green light to start cutting rates." Siegel, who is senior economist at WisdomTree, said he expects a 0.25bps cut to the base rate at the FOMC's September meeting"
Weaker labor data has raised expectations of Federal Reserve interest-rate cuts and lifted market sentiment, with strategists forecasting multiple reductions this year. Goldman Sachs warns job growth remains fragile but anticipates a rebound by 2026 as tariffs ease and policy turns supportive. Recent payrolls undercut the stable labor portrait the FOMC might have sought, and upcoming inflation releases could reinforce that narrative. Conflicting pressures on the Fed's dual mandate complicate policy choices, yet many market participants view slower growth as giving the Fed scope to ease from current 4.25–4.50 percent policy rates.
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