Barclays’ economists have revised their expectations for the next U.S. Federal Reserve interest rate hike to January, a shift from initial predictions of a December increase. The adjustment follows the release of softer-than-expected October employment figures and dovish commentary from the Federal Reserve.
The Labor Department’s report revealed a rise in the unemployment rate to 3.9% in October, up from 3.8% in September. This marks the highest level since January 2022, indicating a potential weakening of the job market, a key gauge of economic health.
In response to these developments, Barclays economists released a note on Thursday, suggesting that the Federal Open Market Committee (FOMC) is likely to continue its monetary tightening measures. They argue for a higher interest rate trajectory than what is currently expected by the market.
The economists also dismissed any prospect of an interest rate cut before September 2024. This forecast indicates a sustained period of tightened monetary policy, influencing borrowing costs and investment strategies.
These predictions highlight the significance of economic indicators and central bank communication in determining the timing of interest rate adjustments. Stronger job market figures often suggest a growing economy, while weaker figures can signal economic challenges, influencing the pace and timing of interest rate hikes.
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