U.S to slide into recession? JPMorgan says Fed will cut rates steeply

JP Morgan has said that the US Federal Reserve is being forced to shift from their traditional decision around rate cuts, due to the improbable labor market in the US currently. It somehow appears that the Fed has a weak resolve around a lot many things, with the rate cuts being one of them. However, JP Morgan is of the opinion that the Fed can cut rates quite steeply in the coming times.

Unemployment and labor demand creating problems

Labor demand and unemployment has created a lot of issues for the US markets, but the supply has also increased considerably over time. Amid an uncertain market condition, it appears that the Fed Reserve is deviating from its original and traditional path and trying to adapt new means. However, this fear of cutting interest rates too late, could end up to be costly not only for the Fed,, but also to the economy.

Inconsistencies and concerns around rate cuts should be dealt with through policy adjustment, and that too at the earliest, so that the United States does not very easily slide into recession. However, JPMorgan analysts are of the opinion that the Fed does not want to see labor conditions ease further, in this current scenario. It is yet not known how long this 'turf war' will continue however.


At present, the present labor-market uncertainty makes rate cuts clear for the near future and also creates a enhanced vision for the upcoming years, that too, well in advance.

FAQs:

Can US face a recession?
The market uncertainty, dollar weakening, labor demand, unemployment could all become contributing factors for a US recession sooner or later.

Will the Fed Reserve conduct rate cuts?
The Fed Reserve has somehow changed its stance around rate cuts, but Jerome Powell had recently claimed that the rates will be slashed very soon.