Preston Mui

We will be hoping for two things at the September meeting this week: a 50 bps cut and minimal upwards revisions to the unemployment rate projections in the Summary of Economic Projections (SEP).

Our new baseline is a 50 bps cut with a total of 75 bps of cuts in the SEP for 2024. It’s a close call but we think a 50 bps cut is more likely than a 25 bps cut. We think a 50 bps point cut is the right move.

It's the last week of Fedspeak before the blackout period for the September meeting. Everyone speaking this week is on board with Powell's assessment that the labor market is at least balanced.

Even though today’s report gave back some of the weakness in the July household survey, the reversion was slight. The August report meets the conditions we laid out yesterday for a 50 bps cut in September to play catch-up.

A quiet week after Jackson Hole. What we did hear this past week showed that Powell has some convincing to do on the Committee.

Almost as notable as the things Powell said were the things he did not. Between now and September, Fedspeak should focus on keeping the Committee’s options open to a 50 bps cut in September.

Powell's Jackson Hole speech made clear that rate cuts will begin in September. Most notable what he did not say: "gradual." Powell is keeping the door open to a larger cut in September.

When it comes to the Fed policy today, the question of whether or not these rules are good at telling us if we’re currently in a recession is almost besides the point.

Bostic and Musalem, two members on the hawkish side of the Committee, joined the rest of the Committee in signalling an openness to rate cuts in September.