September jobs report builds case for smaller Fed rate cut in November

A stronger-than-expected September jobs report has pushed Wall Street’s debate over how deeply the Federal Reserve will cut interest rates at its November meeting in favor of a more modest path.

Some have even suggested the report could mean the Fed won’t cut rates at all next month.

“Looking at the labour market strength evident in September’s employment report, the real debate at the Fed should be about whether to loosen monetary policy at all,” Capital Economics chief North America economist Paul Ashworth wrote in a note to clients on Friday. “Any hopes of a [50 basis point] cut are long gone.”

As of Friday morning following the jobs report’s release, markets were pricing in a roughly 8% chance the Fed cuts interest rates by half a percentage point in November, down from a 53% chance seen a week ago, per the CME FedWatch Tool.

 

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