Overview

• Economists and markets largely expect a 25-basis-point reduction on Wednesday, the first cut since December, following a two-day policy meeting.
• Weakening labor data, including unusually soft hiring and a large downward revision to past job gains, has strengthened the case for easing as recession risks tick higher.
• Inflation remains a constraint, with CPI rising to 2.9% in August, so investors will focus on guidance about the pace and size of any follow-on cuts.
• President Trump has pressed for lower rates, his move to remove Governor Lisa Cook is tied up in court, and the White House has nominated Stephen Miran to fill the seat vacated by Adriana Kugler.
• Observers are watching for signs of division over a 25- versus 50-basis-point move or a hold, as the Fed’s decision comes during a week of major meetings by the Bank of Canada, Bank of England and Bank of Japan.