Overview

• Traders assign a roughly 96% probability to a 25-basis-point cut at the Sept. 17 meeting, with Treasury yields sliding to multi‑month lows as growth expectations cool.
• Labor indicators have softened, including a rise in unemployment to 4.3%, one of the biggest weekly jumps in initial jobless claims in over a year, and a 911,000 downward revision to payrolls for the year through March.
• Inflation quickened in August, with headline CPI up 0.4% on the month and 2.9% year over year and core at 3.1%, complicating any pivot even as the Fed’s preferred PCE gauge remains central to deliberations.
• Tariff‑related price increases are clouding the outlook, with some officials judging the effects as likely one‑off adjustments and others warning they risk squeezing consumers and prolonging elevated inflation.
• Internal debate has intensified, with Governors Christopher Waller and Michelle Bowman saying cuts should have started in July, while Chair Jerome Powell and regional presidents stress decisions will stay data‑dependent over the coming months.