REUTERS

Standard Chartered expects the US Federal Reserve to cut interest rates by 50 basis points at its policy meeting this month, double its earlier projection of a 25-bp reduction, following a soft August jobs report.

Data on Friday showed US job growth weakened sharply in August and the unemployment rate rose to a near four-year high of 4.3 percent, confirming a softening labor market and bolstering the case for a rate cut this month. In a client note on Friday, the brokerage said that the labor market had shifted “from solid to soft in less than six weeks.”

“August labor market data has paved the way for a ‘catch-up’ 50 basis point rate cut at the September FOMC meeting, similar to what occurred at this time last year.”

After a 50-bps cut the market could take time to price in a slower subsequent pace of cuts, the brokerage added.

Meanwhile, Morgan Stanley and Deutsche Bank do not consider the August jobs report weak enough to warrant a 50-bps rate cut in September, though they noted it could pave the way for reductions at consecutive meetings.