The Federal Reserve should cut rates swiftly – recession or not

US Federal Reserve chair Jerome Powell. — Bloomberg

Last Friday’s weaker-than-expected jobs report has sparked a robust debate about whether the US economy is sliding into recession or whether the rise in the unemployment rate in July was due to a continuing post-pandemic normalisation of the labour market.

Whichever camp you’re in, the right move for the US Federal Reserve (Fed) is to act with urgency, cutting its policy rate a percentage point to 4.25%-4.5% by the end of the year in the name of risk management.