JP Morgan says the Fed has a green light for a 50bp rate cut in Sep. Here’s the trigger.

The latest US CPI report was published on Wednesday:

• Forexlive Americas FX news wrap: CPI continues to cool

JP Morgan in response:

• the CPI is a ‘green light’ for the Federal Open Market Committee (FOMC) to cut in September (the meeting is on Sep 18 and 19)
• the Fed may cut 50bp, or 25bp

JPM on what will prompt a 50bp cut (50bp is the JPM forecast):

• key factor will be the extent of the rebound in the August payroll report
• If job gains fall within the 160-200k range, it could alleviate much of the concern sparked by the July labor report
• However, if the gains are closer to the low-100s, the risk may shift toward growth, potentially leading to a larger cut

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The August US jobs report JPM refer to is due on September 6.

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