September Rate Cut: Where is the Labor Market?

Forecasters and investors were notably uncertain on the size of the cut ahead of the decision, with some suggesting that a larger 50bp move would indicate mounting concerns of labor market weakness. Chair Jay Powell instead reiterated that the “decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labor market can be maintained.” Larger 50bp cuts are not the new normal, but the initial move affirmed the Fed’s commitment to not falling behind.

This brief looks at where the US labor market stands upon the September rate cut. While victory cannot be declared, we ask: what does a soft landing look like?

Trusted Insights for What’s Ahead^®:

• The Fed’s decision to cut rates by the larger 50bps indicates officials’ commitment to support the “strength in the labor market” by ensuring that downside risks do not materializ