Former U.S. Treasury Secretary: weak jobs bring Fed one step closer to 50 bps rate cut

Former U.S. Treasury Secretary David Summers said that while August's nonfarm payrolls report wasn't particularly bad, it did make predicting how much the Federal Reserve might cut interest rates this month more difficult. In an interview, Summers said, “The data, while not showing very significant weakness, certainly don't give you reassurance about the health of the economy if you're concerned about recent statistical trends.” “The probability of a 25-basis-point and 50-basis-point rate cut in September looks a lot closer than I would have guessed a month or two ago.” At the end of the day, Summers said, the size of the Fed's first move doesn't matter. Officials will closely monitor how the economic outlook evolves and adjust policy accordingly. “If the economy weakens significantly, they will cut rates significantly,” he said. “If the economy doesn't really weaken substantially, they'll probably cut rates at a rate of roughly one meeting at a time.”