Fed Projected to Lower Interest Rate for First Time in 2025

(MENAFN) Recent US economic data reveals a sharp uptick in consumer prices and further deterioration in the labor market, setting the stage for the Federal Reserve’s anticipated first interest rate cut of 2025, which is expected next week.

This follows last week’s employment report, and the inflation data released this week has garnered significant attention as markets seek clues regarding the Fed’s next moves on monetary policy.

The latest numbers show that open job listings in the US (JOLTS) dropped to 7.18 million in July, the lowest level since September 2024, falling short of economists’ expectations.

Private-sector job growth also disappointed, adding just 54,000 positions in August, a figure below market forecasts.

In another sign of labor market softness, non-farm payrolls increased by only 22,000 in August, far below the anticipated gain. The unemployment rate also saw a rise, ticking up from 4.2% to 4.3%, its highest point since October 2021.

Further compounding concerns, initial jobless claims for the week ending September 6 surged by 27,000, totaling 263,000—marking the largest weekly increase since October 2021.

Adding to the bearish tone, the Bureau of Labor Statistics (BLS) revised its previous employment figures, revealing that 911,000 fewer non-farm jobs were created during the 12-month period ending in March 2025 than initially reported.

On the inflation front, the Producer Price Index (PPI) declined by 0.1% in August, the first monthly drop since April. However, the PPI still rose 2.6% on a year-over-year basis, missing expectations.

Meanwhile, the Consumer Price Index (CPI) climbed 0.4% month-over-month in August, surpassing forecasts, while annual inflation increased by 2.9%, aligning with expectations. This marked the highest year-on-year inflation reading since January.

Although producer inflation decelerated, the acceleration in consumer prices is likely to keep policymakers on edge.

MENAFN14092025000045017169ID1110058044