In light of the latest critical US jobs report, deVere Group is urging the Federal Reserve to implement a substantial 50 basis point interest rate cut during its upcoming meeting on September 17-18.
The report reveals that the US economy added 142,000 jobs in August, falling short of the anticipated 160,000. Meanwhile, the unemployment rate decreased to 4.2%, down from 4.3% in July.
Nigel Green, CEO of deVere, commented: “The data indicates a significant cooling in the US job market. This jobs report arrives at a pivotal moment for the US economy. Federal Reserve Chair Jerome Powell has shifted his focus from past inflation concerns to the current health of the labor market, recognizing the risk of diminishing opportunities for American workers.”
“Despite this, there is a growing worry that the Fed might take a more cautious approach, potentially opting for a modest quarter-point cut rather than the aggressive action that the current data demands.”
“While the market is anticipating approximately 35 basis points of easing, reflecting a debate between a quarter-point or half-point cut, we firmly believe that the Fed needs to act decisively with a 50 basis point reduction.”
“The Fed has already delayed too long in addressing the increasing economic challenges. Further delay could have severe repercussions for the US and global economy.”
Reports suggest that previous data sets have been revised downward, indicating that current figures may also be inaccurate. Hence, the Fed needs to take action promptly.
Though the Fed might choose a smaller 25 basis point cut at its September meeting, Nigel Green warns that this would be “a dangerous miscalculation.”
A quarter-point adjustment might offer only a temporary relief and is unlikely to effectively address the complex issues confronting the US economy.
“A substantial 50 basis point cut would not only help alleviate current economic pressures but also demonstrate the Federal Reserve’s strong commitment to supporting the US economy,” Green said. “With consumer confidence faltering, spending slowing, and corporate earnings at risk, a cautious 25-point cut is insufficient.”
In conclusion, Nigel Green asserts: “The Federal Reserve must act boldly at its next meeting. The time for hesitation and half-measures is over.”