Created
: 2024.10.02
2024.10.02 21:38
Big interest rate moves are always a tricky business. Two weeks ago, the US central bankers may have hoped that by lowering the key interest rate corridor by 50 basis points, they would take the pressure off the table. But there is always the risk that a big interest rate move will only fuel expectations of further rapid interest rate moves. That, in other words, the Fed won't be able to get rid of the genie it summoned with the 50-basis-point move, Commerzbank's Head of FX and Commodity Research Ulrich Leuchtmann notes.
"The surprisingly large move in September continues to be largely interpreted as an advance of the rate cuts that were expected for the rest of the year anyway, but not as a sign of a fundamentally high pace of rate cuts. The narrative suggested by Fed Chair Jay Powell's comments at the time continues to dominate. The Fed's decision has not shaken the medium-term expectations."
"Although the unemployment rate in August was hardly lower than in the previous month, the job openings rate was significantly higher again at 4.8% (July: 4.6%). This in turn means that part of the unemployment is structurally explainable (in the figure below: as the large distance from the origin), mainly as mismatch unemployment; the cyclical part of unemployment - the one the Fed could do something about with loose monetary policy - is almost as low as in 2019."
"The currency market is hardly reacting to the publication of the job openings statistics. But that also means that if the Fed were to use the labor market situation as a motive for aggressive interest rate cuts, it would probably be as wrong as it was in the summer of 2021, when it did nothing. A loose Fed policy based on that and the resulting USD weakness would probably be of relatively short duration."
Created
: 2024.10.02
Last updated
: 2024.10.02
FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.
We hope you find this article useful. Any comments or suggestions will be greatly appreciated.
We are also looking for writers with extensive experience in forex and crypto to join us.
please contact us at [email protected].
Disclaimer:
All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.
The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.
Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy