Analyst: The Fed's threshold for a 50 basis point rate cut next week is high, and the drawbacks of a steep cut outweigh the benefits

September 10th. Kieran Williams, the Asia Rates Strategist at InTouch Capital Markets, said, "The threshold for a 50-basis-point rate cut is relatively high. It may be necessary for core inflation to unexpectedly and significantly fall below expectations in order to give confidence to doves. Given the stickiness of service prices and the Fed's tendency to signal gradualism, a significant rate cut next week seems improbable. However, data will influence the market's enthusiasm for pricing in an accommodative path by the end of the year." City Index's Senior Market Analyst Matt Simpson also stated, "I think that a 50-basis-point rate cut at this moment would do more harm than good to market confidence. Furthermore, the Fed may want to save face and not completely yield to Trump's wishes." Simpson pointed out, "Current market pricing reflects expectations of three more rate cuts in the next three meetings. The Fed is in a good position to either meet these expectations well or increase the likelihood of a rate cut in 2026 without being compelled to cut rates by 50 basis points next week."