Bitcoin price today: falls to 2-week low below $113k ahead of Fed Jackson Hole
Investing.com - Weak job growth and concerns about further downward revisions to employment figures have likely already convinced Federal Reserve policymakers to resume interest rate cuts, according to analysts at Goldman Sachs.
In a note, the bank suggested that the labor market is likely to seem "mediocre" in the coming months due to "subdued activity growth and special factors" such as a White House effort to shrink the size of the federal workforce and tighter U.S. immigration enforcement.
These changes, coupled with the impact of tariff-fueled economic uncertainty on hiring, "should support" their forecast for three 25-basis point reductions by the Fed in September, October and December, followed by two more next year, the analysts said.
"A larger 50 basis point cut is also possible but would require a larger rise in the unemployment rate or worse payrolls numbers than we expect," they added.
Traders are now gearing up for the release on Wednesday of minutes from the Fed’s last policy gathering in July, when the central bank chose to keep borrowing costs steady at a range of 4.25% to 4.5%.
Yet the decision was met with the rare dissent of two Fed officials for the first time in decades. Fed Governor Christopher Waller and Fed Vice Chair of Supervision Michelle Bowman both advocated for a rate reduction, arguing that it was necessary to help prop up a softening labor market.
Subsequent data has shown that U.S. jobs growth was significantly weaker than anticipated last month, while the totals for June and May were revised sharply lower. Meanwhile, retail sales rose strongly, following an unexpectedly steep uptick in producer prices.
These figures, coupled with relatively restrained consumer price indicators, have painted a complex picture of a possibly slowing labor market and some tariff-driven -- albeit relatively muted -- inflationary pressures.
Stepping into these crosswinds will be Fed Chair Jerome Powell, who will deliver a closely-watched speech at an annual symposium in Jackson Hole, Wyoming on Friday. Powell has long advocated for a more cautious approach to policy actions, but markets -- who are themselves penciling in a rate cut at the Fed’s next meeting in September -- are curious to see if his opinions have shifted after the recent data deluge.
In a note, analysts at ING added that the Fed’s September meeting could also be "explosive," as it may be the latest episode in an ongoing Powell’s ongoing "tug-of-war" with Trump, who has criticized the Fed leader for not advocating for quick rate cuts to boost the economy.