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Analysis: Shrinking job market will force the Federal Reserve to cut rates consecutively by 125 basis points to 2.25%

Analysis: Shrinking job market will force the Federal Reserve to cut rates consecutively by 125 basis points to 2.25%

BlockBeatsBlockBeats2026/01/05 00:39
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BlockBeats News, January 5, former Merrill Lynch analyst David Rosenberg stated that the U.S. economy will face numerous challenges in 2026, with the job market likely to contract sharply, thereby weakening the economy and forcing the Federal Reserve to respond with significant interest rate cuts. The biggest surprise will be the realization that the labor market is not cooling down, but actually shrinking.


David Rosenberg believes that the U.S. unemployment rate will soon break through 5%, and "by the end of the year, it is likely to test 6%." The collapse of the labor market and the ensuing recession will force the Federal Reserve to cut interest rates by 125 basis points to 2.25% before the end of 2026, which means five 25-basis-point cuts.

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