사진 확대 As employment continues to deteriorate, the Federal Reserve System (Fed) is expected to cut interest rates further at the Federal Open Market Committee (FOMC) on the 29th. Last month, the Fed lowered its key interest rate for the first time in nine months and began a full-fledged monetary policy adjustment.
According to the Chicago Mercantile Exchange (CME) FedWatch on the 23rd (local time), the probability of lowering the benchmark interest rate by 0.25 percentage points at the FOMC in October reached 99.4%. At the last meeting of the year, the FOMC in December, the possibility of lowering interest rates rose to 92.2%, and the Fed is expected to continuously lower interest rates.
Analysts say that the announcement of the September employment report is being delayed due to the federal shutdown, but the job market is getting frozen. According to the employment information company Automatic Data Processing (ADP) on the 1st, employment of private companies in the United States in September decreased by 32,000 from the previous month. It is the largest drop in two and a half years since a drop of 53,000 in March 2023. Earlier in August, 911,000 jobs were evaporated after last year’s job figures were revised drastically. The unemployment rate also rose to 4.3%, the highest in four years.
Consumer prices (CPI), another key indicator of interest rate decisions, have continued to remain volatile, but they are unlikely to hold back from rate cuts by staying in market expectations. In August, the CPI rose 2.9% year-on-year, and has been on the rise again since May. It is predicted that the CPI, which had been on the decline after hitting 3.0% in January, will rise back to the 3% range. It is the highest rate of increase since May last year (3.3%).
However, as the Fed is weighing on job security in responding to worsening employment and rising inflation, the focus is on further rate cuts. According to a dot plot released at the FOMC last month, the Fed has twice announced that it will lower interest rates, presenting the median of its base rate expectations at 3.6% at the end of this year.
“The balance of risk is tilted towards an excessive slowdown in the U.S. labor market,” said Alberto Burnell, chief strategist at XP Investment. “We expect the FOMC to cut interest rates in the next two meetings.”
[New York correspondent Lim Sung Hyun]