Fed Could Slash Rates by 50 Basis Points in September After Weak Jobs Report, Says BlackRock Executive: Report

BlackRock executive Rick Rieder reportedly thinks the U.S. Federal Reserve could slash rates by 50 basis points in September.

Rieder, the asset management giant’s chief investment officer of global fixed income, said in a note to clients that Friday’s tepid jobs report from the U.S. Bureau of Labor Statistics could convince the Fed to institute a larger cut than expected, according to a new report from CNBC.

“If slack in the labor force builds at all, or we continue to see a below 100,000 jobs hiring rate persistently, we would expect the Fed to start moving rates lower, and a 50-basis point cut in September might be possible depending on how the data evolves.”

The new labor report indicated total nonfarm payroll employment increased by 73,000 jobs in July, less than the Dow Jones estimate of 100,000.

The CME FedWatch Tool, which generates probabilities using the 30-day Fed Funds futures prices, estimates there’s an 80.3% chance the Fed will cut the federal target rate by 25 basis points at the Federal Open Market Committee (FOMC) meeting in September, up from 37.7% on Thursday. However, the tool currently estimates there’s zero chance of a 50-basis-point cut.

Fed Chair Jerome Powell said at a press conference this week that no decisions have been made about September’s potential policy choices.

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