Overview

• CME’s FedWatch Tool shows over a 90% chance of a 25-basis-point cut at the September 16–17 meeting, and futures reflect about 60 basis points of easing by year-end 2025.
• Fed President John Williams said he will “keep an open mind” on a September rate reduction, and Governor Mary Daly endorsed roughly two cuts next year as appropriate calibration.
• Economists at BofA Securities and Morgan Stanley maintain forecasts of no rate cuts in 2025, pointing to inflation above the Fed’s 2% goal and a balanced labor market with unemployment steady at 4.2%.
• July’s payrolls report revealed just 73,000 jobs added and downward revisions of nearly 260,000 positions over May and June, prompting markets to reprice the risk of an economic slowdown.
• BofA analysts led by Aditya Bhave warn that cuts driven by true labor-market deterioration would be “bad cuts,” cautioning that easing based on short-term weakness alone would be premature.