Weak US Jobs Report Raises Pressure on Fed for Rate Cut

The Federal Reserve is now nearly certain to cut its benchmark interest rate in September, likely by at least 25 basis points, following a weaker-than-expected August jobs report that showed a significant slowdown in job creation. Market expectations have increased, with a 14% chance of a 50 basis point cut, as investors and economists see a softer labor market as a key reason for the Fed to pivot towards rate cuts to support the economy. The Fed faces a difficult balancing act between fighting inflation, which remains above its 2% target partly due to tariffs, and preventing a rise in unemployment amid slowing job growth. President Donald Trump's tariff policies continue to add inflationary pressure, complicating the Fed's decisions. Financial markets reacted positively to the jobs data, with gains in stocks and cryptocurrencies driven by hopes of easier monetary policy, although some sectors like industrials and energy showed weakness. Fed Chair Jerome Powell has indicated that rate cuts are coming but emphasized a cautious, gradual approach to avoid premature easing that could reignite inflation.