Will there be an interest rate cut in September?published at 16:18 5 August
Dearbail Jordan
Business reporter
The US Federal Reserve voted last week not to cut interest rates.
Other central banks within developed economies, including the Bank of England and the European Central Bank, have recently cut interest rates.
The Fed held borrowing costs but its chair, Jerome Powell, signalled that a cut in September was on the table.
However, this led to speculation that the Fed had waited too long to act.
A cut in interest rates means it is cheaper to borrow money which should, in theory, act as a boost to the economy.
If the jobs figures suggest that the economy is already tipping downwards, then the fear is the Fed is too late.
Last week, the chip-making giant Intel announced it was cutting 15,000 jobs and market rumours suggested that rival Nvidia may have to delay the release of its new AI chip.
What followed was a bloodbath on the Nasdaq, the technology-heavy US index. After hitting a high only a few weeks ago, it plunged by 10% on Friday.
That helped pump-up the fear factor across markets and that’s where danger could lie. If stock market panic continues and shares keep plunging the Fed could potentially step in before its next meeting in September and cut interest rates.
