Title: Federal Reserve's Interest Rate Cuts Hinge on August Jobs Report: Evercore ISI Analysis
The Federal Reserve's decision on interest rates is heavily influenced by the upcoming August jobs report, as highlighted by Evercore ISI analysts. While inflation data has shown some cooling, the Fed now prioritizes labor market trends for its monetary policy decisions. Evercore ISI emphasizes that the Fed is now a "labor data-first Fed," meaning that the strength of the job market will determine the pace and extent of rate cuts.
If August's labor data shows improvement but continues on a softening trend, Evercore ISI expects the Fed to cut rates by 25 basis points at each remaining meeting this year, with potential further reductions into early 2025. However, if the labor market weakens significantly, the Fed may take more drastic measures, with the possibility of cuts totaling 200 to 250 basis points by the end of the year.
The August jobs report is crucial in shaping the Fed's next moves, with inflation concerns currently at bay, allowing the focus to shift towards employment risks. Ultimately, the Fed's decision on interest rates will be heavily influenced by the upcoming labor market data, highlighting the importance of the August jobs report for investors and the broader financial markets.