STANLIB STANLIB Podcasts

US data points to start of the interest rate cutting cycle

--:--
US data released this past week points to less concern about inflation and more concern about the labour market. The Federal Reserve has kept interest rates unchanged at 5.25% to 5.50%, and the forward guidance is a more confident outlook for inflation, with the Fed comfortable of reaching its inflation target within the next year or so.
The Fed is now focusing more on its dual mandate of keeping inflation under control and ensuring the labour market remains strong.
The deterioration in the US labour market, as the unemployment rate moved from 4.1% to 4.3% in July, and inflation mostly under control, are justifying that it is time to start the interest rate cutting cycle, and the Fed is expected to cut rates by at least 25 basis points in September, and to continue cutting interest rates thereafter.
Labour market conditions have slowed meaningfully and suggest that the US economy is going to lose momentum, and that the risk of recession has risen appreciably, while financial markets have only priced for a moderate slowdown in activity.
Click here to listen to the podcast
5 Aug English South Africa Investing · Business News

Other recent episodes

US labour market strength surprises; SA collects more revenue than expected

Several US labour market reports released last week were surprisingly strong. The US created 254 000 jobs in September, well above expectations for 150 000 jobs, while unemployment fell to 4.1% from 4.2%. This encouraged the equity market, as it suggested the US is not about to move into recession,…
7 Oct 7 min

China takes steps to stimulate the economy; SA’s economic data remains weak

China’s authorities last week unveiled a series of measures designed to stabilize the property sector and stimulate consumer spending. These measures included a cut in banks’ reserve requirements and in interest rates. Financial markets were encouraged, having expected any policy stimulus would only follow the US presidential election. Sentiment in…
30 Sep 14 min

US Fed and SARB interest decisions loom in the next few days

The US Federal Reserve will meet on Wednesday this week to discuss interest rates and the South African Reserve Bank (SARB) will meet on Thursday. Both central banks are expected to cut rates by 25 bps and signal further cuts in the rest of this year and 2025. The SARB…
16 Sep 5 min

US labour market trends weaken, SA’s GDP picks up marginally

The US August labour market report was mixed. It showed an improvement in the unemployment rate to 4.2% from 4.3% in July, but the number of jobs created was below the monthly average. Whether the US Fed will cut interest rates by 25 bps or 50 bps later this month…
9 Sep 8 min

Encouraging trends are evident in latest US, European inflation data

US core PCE inflation for July, at 2.6% y/y, was welcomed because it shows inflation is under control, although it still above the US Federal Reserve’s target of 2%. In Europe, consumer inflation has moderated to 2.2% y/y, close to the European Central Bank’s target of 2%, which may prompt…
2 Sep 9 min
All episodes