August 25 – Brokerages are adding a September rate cut to their forecasts after Federal Reserve Chair Jerome Powell signaled the central bank could ease policy next month.
Deutsche Bank, BNP Paribas and Barclays pulled forward their rate cut forecast to September after Powell emphasized increasing risks to the labor market at the Jackson Hole economic symposium on Friday.
“We continue to believe that monetary policy must be forward-looking and consider the lags in its effects on the economy,” and that the Fed must balance risks to both its job and inflation mandates when setting monetary policy, Powell said.
Last month, the U.S. central bank held interest rates steady and maintained its projection for two cuts this year and slightly dialed back its outlook to just one 25-basis-point cut in both 2026 and 2027.
Traders are pricing in 52.3 bps in rate cuts by year-end, according to data compiled by LSEG. They are penciling in about an 83.3% chance of a 25-bps cut in September, according to the CME Group’s FedWatch tool.
The rate-setting Federal Open Market Committee is scheduled to meet again on September 16 and 17.
Compiled by the Broker Research team in Bengaluru; Editing by Krishna Chandra Eluri, Devika Syamnath, Shilpi Majumdar, Vijay Kishore, Harikrishnan Nair and Anil D’Silva
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