**Barclays and BNP Paribas Update Forecast** Barclays and BNP Paribas have changed their outlook on the Federal Reserve’s interest rate policy after Fed Chair Jerome Powell spoke at the Jackson Hole symposium. Both banks now expect two rate cuts this year. Barclays predicts these cuts will happen in September and December. In contrast, BNP Paribas previously thought there wouldn’t be any rate cuts this year. This shift shows that market analysts are rethinking how the Fed may act regarding monetary policy after Powell’s recent comments. Market observers are now looking forward to the U.S. jobs report on September 5, which could significantly impact the likelihood of the expected rate cuts. This moment reminds us of last year after the 2024 Jackson Hole meeting when many believed the Fed would soon shift to a more lenient stance. Major banks adjusted their predictions, expecting rate cuts before the year ended. However, we learned that those cuts did not happen in 2024, with the first one only occurring in March 2025. **Caution and Uncertainty** This history teaches us to be cautious about making decisions based solely on Fed comments. We are in a similar situation now, with the Fed funds rate between 4.75% and 5.00%. The latest Consumer Price Index (CPI) data from July 2025 shows a slight rise in inflation to 2.8%, making it harder to predict any upcoming easing. On the other hand, the job market is softening. The unemployment rate has increased to 4.1%, and job growth has slowed to 175,000 last month. This mixed data could lead to unexpected policy changes. The best approach in the coming weeks is not to bet on a specific direction but to prepare for a possible sharp move by investing in volatility. We should consider options that benefit from significant price changes, whether they go up or down. For example, strategies using options on SOFR futures can be designed to take advantage of market reactions to the upcoming September 5 jobs report. This way, we can position ourselves for the event without needing to predict the Fed’s final decision. Create your live VT Markets account and start trading now.

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