Investors are now looking forward to the upcoming rate decision by the US Federal Reserve (Fed) for August as sentiments of easing monetary policy by the central bank widen ahead of the September meeting.
The position of interest rates that have reached their peak happened as a result of policy tightening after the Covid-19 epidemic, which has now led to fears of a recession.
US labor market data on Thursday showed mixed signals about economic conditions amid concerns over the Fed keeping ratings higher for longer than necessary.
In addition, total private sector wages grew at the slowest pace since 2021 and this will continue to raise concerns about a sharp slowdown in the labor market. Weekly unemployment benefit claims also fell compared to before.
According to Winberg, Chief Economist at High Frequency Economics, interest rates are currently getting higher and inflation has recorded a decline.
He said, the Fed needs to do something based on the report without having to press the 'panic button' and implement a drastic high cut of 50 basis points.
The Fed's benchmark lending rate, which influences most other countries' rates, currently stands at 5.25% to 5.50%.
However, an increasingly risky labor market downturn will prompt the Fed to act quickly to re-strengthen key economic data.
