Powell May Acknowledge Readiness to Ease Policy If Labor Market Deteriorates

According to Odaily, Nomura Securities analysts have indicated in a recent report that Federal Reserve Chairman Jerome Powell may acknowledge the Fed's readiness to quickly ease policy if the labor market worsens. This comes after concerns about the health of the labor market were raised earlier this month when data showed the unemployment rate jumped to 4.3% in July, triggering the Sahm Rule. The analysts added that despite this, they expect Powell's remarks to be more balanced compared to the July press conference, also highlighting the risks of rising inflation. Following these developments, the market has entered a relatively calm state as expectations for a Fed rate cut have moderated. Last Monday, based on federal funds rate futures trading data, traders estimated a 50% chance of a 50 basis point rate cut by the Fed next month. Currently, the market sees only a 23% chance of such a cut. Nomura Securities noted that this market calm should allow Powell to emphasize that the Fed can remain patient and data-dependent, moderately countering the recent market overpricing of the rate cut cycle.