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James Knightley, the Chief International Economist at ING, highlighted that the labor market's fragility and the deceleration in economic growth could prompt the Federal Reserve (Fed) to implement an earlier-than-anticipated interest rate cut. In his report, he noted that the U.S. employment report released on Friday served as a cautionary signal, suggesting that the stability of the American job market and broader economic growth prospects is in question, and the impetus for a rate reduction is mounting. Despite the potential for tariffs to drive up prices, Knightley believes that long-term inflationary pressures remain modest, thus positioning the Fed to commence interest rate cuts as early as next month. He anticipates that following the initial cut in September, the Fed will enact two additional rate reductions.
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