President Trump is once again pressing the Fed and Chair Jerome Powell to lower rates following a concerning nonfarm payrolls update.
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“Jerome ‘Too Late’ Powell should have lowered rates long ago. As usual, he’s ‘Too Late!'” Trump said in a Truth Social post on Friday.
The Fed will likely lower the federal funds rate by 25 bps during the September 16-17 Federal Open Market Committee (FOMC) meeting. A 50 bps cut is also possible, with a 14.2% chance, according to CME’s FedWatch tool.
Labor Market Slows as Inflation Risks Persist
August’s nonfarm payrolls registered 22,000 new jobs, well below the expectation for 75,000 jobs. With a slowing labor market, the Fed has more reason to lower borrowing costs and boost the economy. Encouraging maximum employment is one aspect of the Fed’s dual mandate, while the other is keeping inflation at bay.
The Fed must still grapple with the risk of rising inflation from Trump’s tariffs. July’s core personal consumer expenditures (PCE) rose at the highest annual pace since February, while its producer price index (PPI) notched the highest monthly increase since February 2022.
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