The Federal Reserve's interest rate cutting plans have been thrown into question following the release of strong jobs data and rising inflation rates. According to recent reports, economists are divided on the number of rate cuts the Fed will signal at their upcoming policy meeting in June.
One report from Bloomberg states that policymakers are likely to back away from a forecast for three rate reductions this year, with some expecting only one or no cuts. A survey conducted by Bloomberg found that 41% of economists expect the 'dot plot' to show two cuts, while an equal number expect just one or no cuts.
Another report from CNBC indicates that traders have backed off on their hopes for interest rate cuts following the release of a strong jobs report. The Bureau of Labor Statistics reported that nonfarm payrolls increased by 272,000 in May and average hourly earnings rose by 4.1% over the past 12 months.
Despite these strong economic indicators, some analysts still believe the Fed will cut rates due to concerns over inflation and a potential recession. For instance, Piper Sandler's Chief Investment Strategist Michael Kantrowitz expects the Fed to cut interest rates at its July meeting in order to stave off a recession.
However, others argue that the labor market is still strong and that inflation is not yet a major concern. For example, Liz Ann Sonders, chief investment strategist at Charles Schwab, has stated that she believes the Fed will keep rates steady for now.
Overall, it appears that the Federal Reserve's interest rate cutting plans are uncertain at best. While some economists and analysts believe that rate cuts are necessary to prevent a recession or combat inflation, others argue that the labor market is still strong and that there is no need for such drastic measures.
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