Analysis: The Fed's final rate cut is expected to exceed its currently implied level

September 18th - The economists at the Netherlands International Group stated in a report that the main reason for the Fed's rate cut was the downside risks facing the US labor market. Given the recent weak job data, this reason was not astonishing. Fed Chair Powell characterized this rate cut as a "risk management-based rate cut" as, on the surface, the US economic conditions seemed to be acceptable. However, the economists pointed out that a more in-depth analysis would show that the situation was evolving, and the most significant change was reflected in the labor market. The institution's economists also noted that the Fed raised its expectations for economic growth and inflation while lowering its expectations for the unemployment rate, indicating that policymakers believed that taking prompt and strong actions in the coming months would have a tangible impact on the economy. We believe that the Fed's final rate cut will exceed its current implied level. (FX678)