It “wouldn’t take much for the Fed to be behind the curve”, then “a string of 50bp cuts”

An interesting snippet from Deutsche Bank, expecting 25bp rate cuts ahead, but read on for the “however”.

DB say that while Friday’s … payrolls report was disappointing:

• the data
  did not rise to the “significant deterioration” Waller noted was needed
  for larger (50bp) rate cuts.
• So our economists keep to their
  expectations for a 25bps cut next week

And then add:

• The
  risk for the Fed is if and when job losses actually arrive in the
  payrolls report, you tend to get little warning
• With hiring now relatively soft it wouldn’t take much
  for the Fed to be behind the curve and a string of 50bp cuts to follow.
• With markets now pricing in over 250bps of cuts by January 2026 there
  has to be a reasonably high market expectation in the fixed income space
  of this policy error occurring

This article was written by Eamonn Sheridan at www.forexlive.com.