“In resuming its rate-cutting cycle, the Fed is responding primarily to signs of weakening labor demand,” said Seema Shah, chief global strategist at Principal Asset Management.
“The apparent softening in the jobs market appears to have prompted a preemptive move to prevent further deterioration, with September’s rate reduction likely marking the start of a sequence of cuts.” Shah projected another 25-basis-point cut at the Fed’s December meeting.
However, the ongoing government shutdown has clouded the economic outlook.
“The near total blackout on government economic data during the shutdown may complicate the Fed’s decision-making,” said Bankrate financial analyst Stephen Kates.
“A prolonged government shutdown and ongoing tariff negotiations continue to introduce significant uncertainty into the immediate monetary policy outlook.”