TechFlow news, August 5 — According to Jinshi Data, analysts pointed out that the Federal Reserve might be forced to cut interest rates before its September meeting to prevent a recession-triggering feedback loop between financial markets and the real economy. Currently, market dynamics are crucial to the Fed's decision-making. After the Bank of Japan raised interest rates, weaker-than-expected U.S. economic data worsened global imbalances.
Although last week’s employment data did not clearly signal a recession, market pessimism about the economic outlook is rising, especially amid escalating geopolitical tensions. Analysts believe that while the current economic fundamentals have not significantly changed from last week, the market’s pricing-in of recession risks could itself contribute to triggering a downturn. To prevent falling asset prices from further spilling over into the real economy, the Fed may cut rates within this month to stabilize market sentiment and reduce the risk of an economic recession.
