Federal Reserve interest rate cut expectations remain rock solid: Non-farm payroll data would need to show a dramatic surprise to change the pace

【CryptoWorld】Currently, the market has a fairly solid expectation for the Federal Reserve’s interest rate cut path this year—two 25 basis point cuts, with the first expected to occur in late April. How firm is this pricing? Even if this Friday’s US December non-farm payrolls report shows a small surprise, it is unlikely to shake this expectation.

According to the latest analysis, Goldman Sachs expects the employment increase in this report to be about 70,000 jobs, which aligns with the market consensus. Although unofficial market forecasts suggest there may be a slight upside risk, even if the data is close to expectations, it would instead reinforce rather than disrupt the current macroeconomic narrative—demonstrating the market’s confidence in the rate cut cycle.

To truly change the timing of rate cuts, the data would need to show a “significant surprise.” Specifically, from a market perspective, non-farm payrolls between 70,000 and 100,000 are ideal, reflecting continued economic expansion without reigniting inflation concerns or threatening the start of the rate cut cycle—fully supporting the view that the US economy is gradually slowing rather than experiencing a sudden hard landing.

But what if the data falls below 50,000? That would be interpreted as below the employment growth level needed to maintain economic stability, likely causing investors to worry about a sharp slowdown. On the other hand, if the data exceeds 125,000, it could prompt the market to reassess the timing of the Fed’s first rate cut, pushing the expected cut date back to June.

In simple terms, the current market consensus on the Fed’s policy path is quite solid. Unless employment data shows a significant deviation, this expectation is unlikely to change substantially in the short term.