Interesting quote from Deutsche Bank, predicting a 25bp rate cut in the future, but read on for the “however”.
DB Bank says that while Friday’s payrolls report was disappointing:
- But the data did not rise to the “significant deterioration” Waller referred to, which would have been required for a further rate cut (50 basis points).
- So our economists are sticking with their forecast for a 25 basis point rate cut next week.
Then add:
- The risk for the Fed is that if job losses do arrive in the payrolls report, it is likely to receive little warning.
- With employment now relatively weak, it wouldn’t take much for the Fed to get behind the curve, and a series of 50 basis point cuts would follow.
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With markets now pricing in more than 250 basis points of cuts by January 2026, there should be reasonably high market expectations in fixed income for this policy mistake to occur.
This article was written by Eamonn Sheridan on www.forexlive.com.