Upcoming inflation data is unlikely to prevent the Fed from cutting interest rates, says UBS By Investing.com

Investing.com – Thursday’s release of consumer price index (CPI) data for September will show that price pressures continued to moderate at the end of the third quarter.

The data, which followed Friday’s robust jobs report, will likely shape expectations about the size and pace of interest rate cuts at the Federal Reserve in coming months.

Friday’s producer price data is also expected to point to lower inflation.

In a note to clients, analysts at UBS said they did not expect the inflation print to prevent further cuts in Fed borrowing costs this year, after a 50 basis point cut by the central bank last month.

“With inflation slowing, we expect 50 basis points of Fed easing in the last two meetings in 2024 and another 100 basis points of tapering in 2025,” the analysts wrote.

They signaled that the pace of those cuts could change if a recent decline in inflation stalls or the labor market remains resilient, though they noted that this is not “our base case.”

Bets on another sizeable cut have all but been eradicated following last week’s terrific US jobs report. According to CME Group’s (NASDAQ: loan rates unchanged at the current range of 4.75% to 5.00%.

The US economy added 254,000 jobs last month, up from an upwardly revised figure of 159,000 in August, according to a closely watched Labor Department report. Economists had anticipated a figure of 147,000.

Meanwhile, the unemployment rate fell to 4.1%. Forecasts saw the figure equal to August’s pace of 4.2%.

Average hourly wages rose 0.4% on a monthly basis, faster than forecasts of 0.3% but slightly slower than August’s upwardly adjusted 0.5% mark.

The 30-stock stock posted a record close on Friday, while the technology industry added 1.2 percent and the benchmark rose 51 points, or 0.9 percent. The gains helped the major indices post a fourth consecutive positive week despite looming concerns about the impact of the escalating conflict in the Middle East.

“Our view remains that equity market growth remains well supported,” UBS analysts said.