Sat Sep 14 16:16:00 UTC 2024: ## Fed May Deliver Larger-Than-Expected Rate Cut Next Week, Futures Markets Suggest
**New York, September 14** – The Federal Reserve is now seen as almost as likely to deliver a larger-than-usual interest rate cut next week as a more traditional quarter-point reduction, according to trading in rate-futures contracts. This signals an increased chance that the central bank will take more aggressive action to address economic concerns.
While a quarter-point cut at the Fed’s September 17-18 meeting remains slightly more probable, futures now reflect a 43% chance of a half-percentage point cut, up from 28% just a day earlier.
This market shift reflects traders’ growing belief that the Fed may prioritize combating potential labor market weakness over a wait-and-see approach with a smaller initial cut.
“Our view is that the Fed is behind the curve; they should have been easing from June, or potentially May, and now need to catch up,” said Parthenon economist Gregory Daco. “They may have to front-load some of the rate cuts.”
This sentiment aligns with recent comments from Fed officials. While Chairman Jerome Powell previously stated his aversion to further labor market cooling, other policymakers, including San Francisco Fed President Mary Daly and Governor Chris Waller, have expressed concern about a weakening job market and indicated support for front-loading rate cuts if conditions warrant.
As usual, Powell will spend the Thursday and Friday before the meeting in individual meetings with his fellow policymakers to discuss the economic outlook and the appropriate policy response. The upcoming decision will be closely watched by market participants as the Fed navigates a delicate path between tackling inflation and supporting economic growth.
First Piper 