In response to the latest – and critical - US jobs report, the deVere Group calls on the Federal Reserve to deliver a decisive 50 basis point interest rate cut at its upcoming September 17-18 meeting.
The data shows that the United States added 142,000 jobs in August – which is just below expectations of around160,000.
The unemployment rate fell back to 4.2% (down from 4.3% in July).
Nigel Green, deVere CEO says: “The data show US job market has cooled off significantly.
“Today’s jobs report comes at a critical juncture for the US economy. Federal Reserve Chair Jerome Powell has already shifted focus from the inflation concerns of the past to the labor market’s health, acknowledging the risk of diminishing opportunities for American workers.
“Despite this, there is a growing sense that the Fed may remain overly cautious, opting for a conservative quarter-point cut instead of the aggressive policy response that the data clearly calls for.”
“While investors are pricing in roughly 35 basis points of easing, indicating a tug-of-war between expectations of a quarter-point or half-point cut, we strongly believe that the Fed must go big – and go big now.”
“The Fed has already waited too long to address mounting economic headwinds, and delaying further could have dire consequences for the US, and therefore global, economy.
The sets of figures have all been revised down, according to reports, which suggests that these figures today could, in fact, be inaccurate – and, as such, the Fed needs to act now.
The Group acknowledges that the Fed may opt for a smaller, 25 basis point rate cut at its September meeting, but this, says Nigel Green, would be “a dangerous miscalculation.”
A quarter-point cut might provide a temporary boost, but it is unlikely to have the sustained impact needed to counteract the multiple challenges facing the US economy.
A decisive 50 basis point cut would not only calm these nerves but also send a powerful message that the Federal Reserve is committed to supporting the US economy appropriately.
“Consumer confidence is wobbling, spending is slowing, and corporate earnings are under threat. The Fed cannot afford to tiptoe around these warning signs with a cautious 25-point cut. It’s simply not enough.”
The deVere CEO concludes: “The Fed must move boldly at its next meeting. The time for hesitation and/or half-measures has passed.”
