The scenario is reversing: Banks have revised Fed forecasts
Forecasts for the Fed's interest rate cut have changed significantly following employment data released on Friday. The Fed, which is preparing for the soft landing, is now said to be forced to land hard.
According to the Wall Street Journal, employment data released on Friday, which shook the markets, was the main concern of those who guided economic policy in Washington, and the scenario for the U.S. economy is reversing. It is stated that Fed officials, who are preparing for a soft descent during this year, may have to go to the hard descent in the light of the latest data.
Investors are concerned about the possibility that the Fed is late. An effect of this was also seen with declines in exchanges. On the other hand, instead of when the Fed will start lowering the interest rate, it has started to be discussed what size a reduction will be made in September.
Bank analysts also revised their forecasts for the interest rate cut. Citigroup and JPMorgan expect the Fed to cut 50 basis points in September, 50 in November and 25 basis points in December, reducing interest by a total of 125 basis points before the end of the year.
The interest rate decision next month will be announced on September 18. Before this meeting, employment data for August will be published on September 6th and inflation data will be published on September 11th.
