LIVE MARKETS-Focus on possible rate cuts beyond September going into Fed meet

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FOCUS ON POSSIBLE RATE CUTS BEYOND SEPTEMBER GOING INTO FED MEET
With the Federal Reserve widely expected to cut interest rates by 25 basis points next week, the focus for investors may be on any hints from the Fed of how many more cuts are likely for the rest of the year.
"For the interest rate forecast 'dots,' we think the median for this year will continue to show one further cut beyond the expected action taken next week," but there is a risk of possibly two more cuts, writes Michael Feroli, chief U.S. economist at JP Morgan.
In addition, the Fed's statement and Fed Chair Jerome Powell's comments afterward are likely to "note the heightened downside risks to employment in justifying the expected move," he notes.

Expectations for a September Fed rate cut rose sharply after a weak July U.S. payrolls report.
Similarly, economists at BofA write in a note Friday that the Fed "has telegraphed a 25bp cut at its September meeting" and so investors will look at the Fed's summary of economic projections and listen to comments "to assess the pace and extent of cuts going forward."
"We think the 2025 and 2026 median dots will show 50bp of cuts each. Risks are for 75bp in 2025," they write.
In addition, Powell's characterization of the labor market slowdown - cyclical or structural - and inflation - one-off or sticky - should provide clues on his expected policy path, BofA economists write.
After Thursday's data, specifically a report that showed U.S. jobless claims rose sharply last week, rate futures pricing reflected bets on three straight quarter-point Fed rate cuts, one at each meeting left this year, starting with the Fed's September 16-17 meeting.


(Caroline Valetkevitch)
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