Barclays: Fed unlikely to cut rates by 50 basis points in September

Barclays, the second largest bank in the UK, said it now expects the Federal Reserve FOMC to cut interest rates three times this year, in September, November and December, by 25 basis points each time. It is assumed that the labor market will show continued resilience in the August report and the unemployment rate will stop rising. Based on this assumption, it is currently considered unreasonable to cut interest rates by 50 basis points in September. However, if the unemployment rate rises further, it will raise concerns that the labor market is cooling faster than expected. Looking ahead to 2025, the unemployment rate is expected to gradually fall to 4.2%, and the inflation forecast will remain unchanged. It continues to expect the FOMC to cut interest rates three times in March, June and September next year, and it is expected that concerns about the lack of further progress in inflation in the second half of 2025 will cause the FOMC to suspend interest rate cuts after the federal funds rate range reaches 3.75-4.00%. In the long run, it continues to be believed that the neutral interest rate level is around 3.00-3.25%. (Jinshi)