"If the market doesn't seem sure whether or not to expect a base interest rate cut next month, it's not alone-members of the Federal Open Market Committee (FOMC) themselves may have little clue which way the vote is going to go. In the run-up to this week, the mood was one of disappointment that the FOMC wouldn't deliver a final cut for 2025, an action many analysts had priced in since this summer."
"But the tides changed quickly, based on both data and comments from members of the FOMC, and at the time of writing, CME's FedWatch barometer places an 81% probability of a cut early next month. A key part of the shift came after comments from the New York Fed's John Williams, who joined voices like Trump appointee Stephen Miran and Governor Chris Waller in advocating for a cut."
"Offsetting the tepid employment outlook, which forms one part of the Fed's mandate, is the inflation question. The first payroll report after the end of the government shutdown painted a pallid picture of the jobs market. Powell called it a "low hire, low fire" environment. The unemployment rate remained relatively stable at 4.4%, and the jobs market added a relatively small 119,000 roles in September."
Markets and many FOMC members remain uncertain about whether the Federal Reserve will cut the base interest rate next month. Investor odds shifted from roughly 50/50 to an 81% implied probability after fresh data and public comments from several Fed officials. Some officials advocated a cut, but other members may question whether those statements reflect genuine policy views or political positioning. Employment data showed sluggish hiring, with just 119,000 jobs added and unemployment steady at 4.4%. Inflation remains above the 2% target, increasing the importance of upcoming consumer and holiday spending data for policy decisions.
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