Lots have changed since the last Fed meeting, and speculation for more rate cuts is now higher at future Fed meetings.

First, Powell said at the Jackson Hole event that a shifting balance of risks “may warrant adjusting policy,” meaning the risks of a worsening economy caused in large part by high rates will need to be adjusted.

Sure enough, the data did prove that a worsening economy is at play. The economy added only 22,000 jobs in August, below expectations of 75,000, and the unemployment rate rose to 4.3%, as expected. This was the 2nd lowest jobs report number since July 2021. On top of that, the revised June jobs report was lower for the second time, with a total of -160,000 jobs. If that wasn’t enough, the US Labor Department revised -911,000 jobs from the data reported in the 12 months ending March 2025. This means that for the last year, the Fed kept rates high due to a strong economy, which was highly miscalculated. The job market is far weaker than initially reported.

On inflation, we also have good news,
August PPI inflation dropped to 2.6%, below expectations of 3.3%. Core PPI inflation fell to 2.8%, below expectations of 3.5%.
August CPI inflation rose to 2.9%, in line with expectations of 2.9%. Core CPI inflation rose to 3.1%, in line with expectations of 3.1%.

Markets are now pricing in 75 basis points of rate cuts by year-end.
While CPI inflation isn’t yet at the Feds 2% benchmark, the labor market is simply too weak to ignore.

Today’s national average 30-year mortgage rate is at an 11-month low of 6.27%