The U.S. added a disappointing 142,000 jobs to the labour market in August, less than the expected 160,000 nonfarm payrolls, prompting the CEO of a leading financial advisory and fintech, to call for an aggressive half a percent rate cut and not a conservative quarter rate cut.
In response to the latest and critical US jobs report, the deVere Group calls on the Federal Reserve to deliver a decisive 50 basis point interest rate cut at its upcoming September 17-18 meeting.
“The data shows the US job market has cooled off significantly, with the unemployment rate falling back to 4.2%, down from 4.3% in July,” said deVere CEO Nigel Green.
“Today’s jobs report comes at a critical juncture for the US economy. Fed Chair Jerome Powell has already shifted focus from the inflation concerns of the past to the labour market’s health, acknowledging the risk of diminishing opportunities for American workers.
“Despite this, there is a growing sense that the Fed may remain overly cautious, opting for a conservative quarter-point cut instead of the aggressive policy response that the data clearly calls for,” Green said.
“While investors are pricing in roughly 35 basis points of easing, indicating a tug-of-war between expectations of a quarter-point or half-point cut, we strongly believe that the Fed must go big – and go big now.”
“The Fed has already waited too long to address mounting economic headwinds, and delaying further could have dire consequences for the US, and therefore global, economy.”
The sets of figures have all been revised down, according to reports, which suggests that Friday’s figures could, in fact, be inaccurate – and, as such, the Fed needs to act now, Green explained.
The deVere Group acknowledges that the Fed may opt for a smaller, 25 bps rate cut at its September meeting, but this, said Green, would be “a dangerous miscalculation.”
A quarter-point cut might provide a temporary boost, but it is unlikely to have the sustained impact needed to counteract the multiple challenges facing the US economy, he said.
A decisive 50 basis point cut would not only calm these nerves but also send a powerful message that the Federal Reserve is committed to supporting the US economy appropriately, he added.
“Consumer confidence is wobbling, spending is slowing, and corporate earnings are under threat. The Fed cannot afford to tiptoe around these warning signs with a cautious 25-point cut. It’s simply not enough.”
The deVere CEO concluded that the Fed, “must move boldly at its next meeting. The time for hesitation or half-measures has passed.”
