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Barclays Expects Fed to Delay Rate Cut Until December Amid Strong Labor Market

Despite market bets on a September cut, some analysts warn Powell may avoid signaling rate easing at Jackson Hole amid lingering inflation and stagflation concerns.

Summary

While markets anticipate a 25 basis point U.S. Federal Reserve rate cut in September, HSBC and Bank of America analysts believe Chair Jerome Powell may refrain from hinting at near-term easing during Friday’s Jackson Hole speech, citing stagflation risks and rising inflation pressures. Barclays had earlier forecast the first 25 basis point cut in December, citing a still-strong labor market. Powell is scheduled to speak at 22:00 local time at the global central bank meeting.

Terms & Concepts
  • Basis Point (bps): A unit equal to one-hundredth of a percentage point, commonly used in interest rate discussions.
  • Jackson Hole Symposium: An annual central banking conference where global monetary policy issues are discussed, closely watched for future policy signals.
  • Monetary Policy: The process by which a central bank manages interest rates and money supply to influence the economy.