Easing inflationary pressures since the start of the year gave Fed policymakers enough confidence to cut interest rates by half a percentage point on Sept. 18. The cut was the first in more than four years and represented a shift in the central bank’s policy to head off a worsening job market.
Investors will have plenty of comments to digest next week from numerous Fed officials, including presidents Michelle Bowman, Adriana Kugler and Lisa Cook, as well as regional presidents Raphael Bostic and Austan Goolsbee, who are scheduled to appear at various events.
The August inflation numbers were accompanied by data on personal consumption and income, leading economists to predict further robust growth in household spending. Sustained growth in consumer spending helps improve the chances that the economy will continue to expand.
Other economic data includes new home sales for August, second-quarter GDP and revised GDP for the year to 2019, weekly jobless claims and durable goods orders for August.
Bloomberg Economics:
“In our view, a big Fed rate cut makes a soft landing more likely but by no means guarantees it. Our baseline is for the unemployment rate to reach 4.5% by the end of 2024 and rise to 5% next year.” –Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou, and Chris G. Collins, Economists. For the full analysis, click here
In Canada, July GDP data and preliminary August figures suggest that third-quarter growth will be weak, below the Bank of Canada’s forecast of an annualized growth rate of 2.8 percent. Meanwhile, Bank of Canada Governor Tiff Macklem is scheduled to speak at a banking conference in Toronto.
Elsewhere, the OECD will release new economic forecasts on Wednesday, the Swiss and Swedish central banks may cut interest rates, and Australia’s central bank is expected to keep rates on hold.
