BofA Says Nonfarm Payrolls Won't Determine the Fed's September Rate Decision

ChainCatcher report: Amid recent volatility in the bond market, investors are awaiting two key U.S. data releases that could influence the Fed’s decision: the August nonfarm payrolls report, due this Friday, and the August CPI data, set for release on September 11. However, according to Bank of America, these two reports carry different weights in the context of the Fed’s September 15–16 policy meeting. The bank views the nonfarm payrolls report as more of an “appetizer,” while CPI remains the “main course” that will determine whether the Fed raises rates. Bank of America analysts stated on Wednesday: “Nonfarm payrolls are unlikely to be the decisive factor for a September rate hike. A significantly weak report could lower the probability of a hike, but CPI remains the critical data point determining whether the Fed follows through with an increase. We maintain our view that a September rate hike is likely.” Unless Friday’s nonfarm payrolls report delivers a clear downside surprise, it is unlikely to serve as the decisive factor in the September FOMC debate. The bank particularly emphasized that inflation remains the Fed’s primary concern at this time.