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Mizuho Bank: The Fed Has Been Slapped in the Face by Reality, Easing Cycle Set to Begin
Summary: According to Jinshi's report, Mizuho Bank stated that the August US non-farm payroll report further confirmed the weakening trend in the labor market, with employment, hours worked, and income growth falling to pandemic levels. Regardless of inflation, the Fed is almost certain to cut interest rates at the September meeting. A 25 basis point cut ...
According to Jinshi's report, Mizuho Bank stated that the August US non-farm payroll report further confirmed the weakening trend in the labor market, with employment, hours worked, and income growth falling to pandemic levels. Regardless of inflation, the Fed is almost certain to cut interest rates at the September meeting. A 25 basis point cut is almost certain, but if August inflation is weaker than expected, a 50 basis point cut is more likely. The Fed's previous inflation forecasts have been proven wrong by reality, and its 2026 unemployment rate forecast faces the risk of not being met. They were overly pessimistic about inflation and overly optimistic about the labor market. It is expected that the Fed will initiate a sustained easing cycle, aiming to lower interest rates to what they consider a neutral level, around 3% by March 2026. The new Fed chairman is likely to further stimulate measures by lowering rates to near 2%. However, the risk is that if inflation picks up again, at least some stimulus measures will be withdrawn by 2027.
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Link: Mizuho Bank: The Fed Has Been Slapped in the Face by Reality, Easing Cycle Set to Begin [Copy]
