The non-farm data in August is ambiguous, and the policy direction after the interest rate cut in September remains to be observed

The non-farm employment data in August has attracted the attention of both hawks and doves, making the Federal Reserve's policy direction this fall full of uncertainty. A 25 basis point rate cut in September is almost a foregone conclusion, but the situation afterwards becomes more complex. The ambiguous non-farm report will not change the Fed's inclination to start cutting rates at its September meeting. However, it does not provide much clear information about what will happen next - neither indicating that a soft landing for the economy is a done deal nor suggesting that rapid deterioration in the job market requires active countermeasures from the Fed. There will be two more employment reports released before November's meeting. The dot plot forecasted only one rate cut by 2024 in June, but September’s dot plot may show more cuts, although it may not meet market expectations. Employment, inflation and economic growth data for October will be key to determining next steps.