Nick Timiraos at the Journal (gated) writes on the Federal Reserve questioning if it should cut by a traditional 0.25 percentage point or by a larger 0.5 point at next week's meeting.
Says:
- Powell kept all his options open
- Fed nervous about keeping interest rates too high for too long
- firmer housing costs in the consumer-price index report Wednesday weakened the case to push through a larger cut
- hiring in June and July was weaker than initially reported, but payroll growth improved in August
And:
- Answers to the tactical question over how fast to go could reveal clues about the Fed’s broader strategy. The amount of cuts over the next few months “is going to be a lot more important than whether the first move is 25 or 50, which I think is a close call,” said Jon Faust, who served until earlier this year as a senior adviser to Powell.
25bp is the market bias right now, but there are still forecast for 50bp doing the rounds.
What is your forecast? Let me know in the comments. I'm 25bp.
