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yesterday

Fed Officials Open to September Rate Cut While India’s RBI Prepares to Hold

Federal Reserve leaders say cooling inflation coupled with weaker job growth will determine whether they ease policy next month.

Federal Reserve Bank of San Francisco President Mary Daly poses for a photograph at the Kansas City Federal Reserve Bank's annual Economic Policy Symposium in Jackson Hole, Wyoming, U.S. August 25, 2023. REUTERS/Ann Saphir/File Photo
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Overview

  • New York Fed President John Williams said he enters the September FOMC meeting with an open mind on cutting rates, subject to incoming data.
  • San Francisco Fed President Mary Daly described every future meeting as ‘live’ for policy changes, citing a cooling labor market without broad tariff-driven inflation spillovers.
  • Futures markets now assign more than a 90% probability to a 25-basis-point cut at the September 16–17 meeting, according to the CME FedWatch Tool.
  • Economists at Morgan Stanley and Bank of America caution that high inflation, paired with a stable unemployment rate, makes a 2025 rate cut unlikely despite weaker payroll figures.
  • Having front-loaded 100 basis points of repo rate cuts since February, the Reserve Bank of India is expected to maintain its 5.5% rate at the August meeting as low inflation faces fresh downside risks from US reciprocal tariffs.