Federal Reserve officials are expected to lower interest rates by 25 basis points during their upcoming meeting. The latest weak non-farm payroll data has created room for further rate cuts. According to the Bureau of Labor Statistics, non-farm employment increased by just 12,000. However, these figures might be distorted due to hurricanes and a major strike at Boeing (BA, Financial).
The August and September job numbers were revised downward, while the unemployment rate remained steady at 4.1%. This report underscores the cooling of the labor market from previously overheated levels, supporting the Fed's ongoing adjustments to its restrictive monetary policy.
Steven Blitz, TS Lombard's Chief U.S. Economist, stated that the weak job data removes any doubt regarding a 25 basis point rate cut in November and another in December. Blitz forecasts that the Fed will lower rates to a range of 4% to 4.25% and then pause, which is 75 basis points below the current benchmark rate. He emphasized the importance of addressing the downward revisions of the August and September data.
Market futures pricing indicates a general expectation that policymakers will implement a 25 basis point rate cut at the next meeting. The Bureau of Labor Statistics noted that hurricanes Helene and Milton may have impacted the non-farm employment figures for certain industries last month, though the exact impact on employment, income, and work hours remains unquantified.
