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Factbox: Wall Street’s Perspective on the US Jobless Rate and Its Impact on Fed Rate Cuts – By Reuters
The Federal Reserve is anticipated to reduce borrowing costs at its upcoming meeting on September 17-18. The strength of the job market will play a crucial role in determining whether the Fed opts for a quarter-point cut or a more significant half-point reduction.
Below is a summary of various Wall Street banks’ forecasts regarding the August employment report and their expectations for the Fed’s rate cut this month. Banks’ baseline forecasts are presented in uppercase letters.
Some banks have also projected potential Fed actions based on different outcomes from Friday’s labor market report, with alternative policy rate forecasts indicated by an asterisk in the table.
Economists surveyed estimate that the U.S. unemployment rate decreased to 4.2% in August from 4.3% in July, while payrolls are expected to have increased by 160,000, up from the previous month’s increase of 114,000. The employment data will be released at 08:30 ET (12:30 GMT) on Friday.
| Unemployment Rate | Payroll Gain | Fed Rate Cut Prediction |
|---|---|---|
| 4.2% | 100K-124K | Citi* |
| 4.2% | 125K-149K | Nomura, Bank of America* |
| 4.2% | 150K-174K | Oxford Economics |
| 4.2% | 175K-199K | Jefferies, Barclays, Morgan Stanley |
| 4.2% | 200K+ | TD Securities, Bank of America |
| 4.3% | 125K-149K | Bank of America, Citi, Nomura |
| 4.3% | 150K-174K | Evercore ISI, Citi, ING Economics* |
| 4.3% | 175K-199K | Citi* |
| 4.4% | 175K-199K | Evercore ISI* |
| 4.4% | 200K+ | Evercore ISI* |
These predictions reflect the varying expectations of Wall Street as they anticipate the labor market’s performance and its implications for Fed policy.
