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Fed Update: Rate cuts to support jobs market
The easing cycle continues as Fed supports the labor market
By Metrobank Research
Monetary officials in the US noted labor market conditions have remained weak, signaling continued rate cuts by the Federal Reserve (Fed).
The Fed reduced the Federal Funds Target Rate (FFR) by 25 basis points (bps) to 4.50% – 4.75% during the Federal Open Market Committee (FOMC) meeting on November 6-7.
Statements by the FOMC and its chairman Jerome Powell both acknowledged weakness in the jobs market and inflation’s continued movement toward the 2% target.
Given that the recent developments align with Metrobank Research’s expectation, we maintain our forecast that the Fed will continue with its easing cycle and deliver a total of 100 bps worth of cuts for FY 2024, 100 bps in 2025, and 50 bps in 2026. This should bring the target FFR to its terminal rate of 3.00% by end-2026.
On the domestic front, Metrobank Research maintains its view that the BSP will reduce its policy rate by another 25 bps during its last Monetary Board meeting in December, followed by a cumulative 100 bps cuts in in 2025 and a cumulative 50 bps cuts in 2026. This would bring down RRP to 4.25% by end-2026.
The cycle continues: Fed to support the labor market
Fed is forecast to continue with its easing cycle
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