Since July, investors have begun to expect deeper interest rate cuts from the Federal Open Market Committee (FOMC). On August 1st, the Bureau of Labor Statistics announced a historically large downward revision to recent months’ job reports, along with a relatively weak July jobs report. This report suggested that job growth in the United States has slowed or perhaps stalled, rather than growing strongly as had been reported up to that point. With this news, investors adjusted their Federal Reserve rate cut expectations substantially downward. In late August, Fed Chairman Jerome Powell indicated during a Jackson Hole speech that the committee was planning a path to lower rates. This speech appears to have cemented the chances of a rate cut at the upcoming September FOMC meeting.
In this week’s Market Note, we show the expected 2025 path of interest rates on July 31st, on August 1st, and on August 26th. The August 1st jobs report has had the largest impact on rate cut expectations, while Jerome Powell’s Jackson Hole speech and discussions about Fed independence had smaller impacts.
The Verus Market Note provides market commentary along with relevant charts and graphs. Each week, we highlight a key story from the finance world that we believe will pique your interest. While these insights are meant to inform and enrich your understanding of the current market landscape, they do not constitute investment advice or a recommendation to buy, sell or hold a particular security or pursue a particular trading strategy.
