Easing Inflation and Job Market Trends Signal Potential Rate Cuts by US Federal Reserve

S&P Global highlights that recent easing inflation and job market trends in the US may prompt the Federal Reserve to cut interest rates, affecting rates globally. Central bankers will closely watch post-Jackson Hole economic data. US core PCE figures and employment will be crucial for rate decisions.

Easing inflation and a weakening job market in the US, unveiled in recent figures, are likely to compel the Federal Reserve to cut interest rates, a move that could trigger lower rates in developing countries such as India, according to S&P Global on Friday. Year-on-year inflation in the US hit its lowest mark in August, dipping from 3% in June to 2.9% as of August 21.

On Wednesday, data from the US Bureau of Labor Statistics revealed that 818,000 jobs were created in March, falling short of expectations. While the exact size of the potential rate cut remains uncertain, the latest flash PMI suggests a favorable environment for such a move.

The report states that US consumer confidence, personal income, and spending data will shape inflation outlooks and influence monetary policy expectations. Central bankers worldwide will keenly watch economic data following the Jackson Hole Symposium, where US Federal Reserve Chairman Jerome Powell's Friday address could clarify the trajectory for September rate cuts amid rising unemployment concerns. Additionally, India's RBI holds firm on its policy repo rate at 6.5%, citing food inflation as a critical factor. (ANI)

(With inputs from agencies.)