Will the Fed resume its rate cutting cycle?

LBS’ Adjunct Professor Linda Yueh told CNN that while the latest US jobs report showed only 22,000 positions added, against a backdrop of job losses earlier in the summer, the data may be the first clear sign of a softening economy.

She noted that inflation is expected to tick up to 2.9 per cent this week from 2.7 per cent, but the Fed’s preferred gauge suggests price pressures aren’t deeply entrenched, giving policymakers room to focus on employment.

Markets are pricing in at least a quarter-point Fed rate cut, with some arguing for a half-point, though Donald Trump’s call for 300 basis points of easing this year looks unrealistic. Yueh underscored that the earlier rate-cutting cycle has supported growth, and with weakness now emerging in the labor market, expectations are building for the Fed to resume cuts, potentially three more this year.

To watch the full interview, click here