The WSJ Timiraos is out with an analysis of the upcoming Fed rate decision. The title of the article says it all with the author calling the decision as a dilemma. That is does the Fed go big or small (or by 25 basis points or 50 basis points).

Some of the highlights;

• Fed set to cut rates at its Sept. 17-18 meeting, first cut since 2020.
• Decision on whether to cut by 0.25 or 0.5 percentage points is closely contested.
• Powell’s recent speech emphasized monitoring job market risks and adapting rate cuts accordingly.
• Some analysts lean towards a smaller cut due to firm housing costs in recent CPI data.
• Economic data mixed: weaker June/July hiring, improved August payroll growth, low layoffs.
• Projections at the upcoming meeting (dot plot) will indicate the number of rate cuts expected this year.
• A smaller cut (0.25 points) is seen as the “path of least resistance,” avoiding market panic.
• A larger cut (0.5 points) could act as insurance against economic slowdown risks.
• The decision reflects Fed’s strategy to balance inflation risks against potential labor market weakening.
• Analysts suggest the Fed could adjust future cuts based on incoming economic data and conditions.

This article was written by Greg Michalowski at www.forexlive.com.