Fed May Consider Rate Cuts Amid Rising Unemployment Risks

According to PANews, a recent study presented at the Jackson Hole Economic Symposium suggests that the U.S. economy may be nearing a critical point where a continued decline in job vacancies could lead to a faster rise in unemployment. This scenario supports the argument for the Federal Reserve to begin cutting interest rates to protect the labor market. The research, conducted by economists Pierpaolo Benigno from the University of Bern and Gauti B. Eggertsson from Brown University, highlights the dual risks faced by Fed policymakers: reducing rates too slowly, resulting in a 'hard landing' with high unemployment, or cutting rates too early, making the economy vulnerable to rising inflation. Their new analysis of the job market indicates that the risk of a hard landing currently outweighs the risk of inflation.