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4d ago

Fed Signals Coalesce Around September Cut as Waller Urges Start, Bostic Backs One Move

Investors now assign high odds to a quarter-point reduction, reflecting concern about softer hiring despite lingering inflation pressures.

Image
The Marriner S. Eccles Federal Reserve Building in Washington, DC, in June 2023.
The exterior of the Marriner S. Eccles Federal Reserve Board Building is seen in Washington, D.C., U.S., June 14, 2022. REUTERS/Sarah Silbiger/File Photo
Governor of the Bank of England, Andrew Bailey looks on during the Bank of England financial stability report press conference at the Bank of England, in London, Britain August 7, 2025. Jordan Pettitt/Pool via REUTERS/File Photo

Overview

  • Federal Reserve Governor Christopher Waller said the Fed should begin cutting rates at the Sept. 16–17 meeting and adjust the pace based on incoming data.
  • Pointing to weaker labor demand, Waller suggested policy should move from the 4.25%–4.50% range toward an estimated 3% neutral rate over time, with multiple cuts possible in the next three to six months.
  • Atlanta Fed President Raphael Bostic said high inflation remains the main risk but judged that a single 25-basis-point cut this year is likely warranted; he is not a voter in 2025.
  • St. Louis Fed President Alberto Musalem called the current stance modestly restrictive and appropriate for now, said he needs more data, flagged downside risks to jobs, and described tariff effects on inflation as likely temporary over the next two to three quarters.
  • Markets price roughly a 90% chance of a September cut as officials weigh a cooling labor market and July’s sharp 0.9% jump in producer prices that could pass through to consumers.