Fed Expected to Cut US Interest Rates After Weak August Jobs Report

Recent U.S. labor market data showing weaker-than-expected job growth and a slight rise in unemployment to 4.3% have intensified expectations that the Federal Reserve will cut interest rates in the coming months. Economists now largely predict three quarter-point rate cuts by the end of 2025, bringing rates down to around 4.50%-4.75%, although some foresee more aggressive easing. President Trump and White House officials have publicly pressured Fed Chair Jerome Powell to reduce rates promptly to support economic growth and help American workers. The slower job gains, coupled with inflation remaining above the Fed's 2% target, have led some Fed officials to prioritize labor market stabilization over inflation control. The softer employment figures have also influenced markets, with mortgage rates falling sharply, real estate stocks rising, and Canadian markets responding to similar job market softness. Despite these trends, there remains some divergence among economists and Fed members regarding the pace and magnitude of future rate cuts.