BlackRock: The prospect of the Federal Reserve cutting interest rates may depend on continued weakness in the labor market

Jean Boivin, head of the BlackRock Investment Institute, said the Fed's outlook for rate cuts is likely to depend on whether the labour market remains sufficiently weak. He noted that Powell described the latest rate cut as "risk management" in response to growing signs of weakness in the labour market, which could mean that future policy action will be highly dependent on data performance. Boivin argued that the Fed may face pressures to control inflation and debt service costs - and while these pressures are dissipating, inflation could easily return if rate cuts boost business confidence and hiring. Against this backdrop, further weakness in the labour market would provide the basis for more rate cuts by the Fed. (Jin Ten)