Markets have convinced themselves they’ll get a September interest rate cut. Now they’re eyeing a double reduction

Economy·Federal Reserve have convinced themselves they’ll get a September interest rate cut

Now they’re eyeing a double reductionBy Eleanor PringleBy Eleanor PringleReporterEleanor PringleReporterEleanor Pringle is an award-winning reporter at Fortune covering news, the economy, and personal finance

Eleanor previously worked as a correspondent and news editor in regional news in the U.K

But this isn’t the only pressure Jerome Powell and the Federal Open Market Committee (FOMC) are under: Analysts and politicians are also getting their orders in for how much of a cut they want to see

Despite the fact that the FOMC has reiterated time and again that its decision is based on economic data and anecdotal evidence only, that hasn’t stopped high-file individuals from having their say

Treasury Secretary Scott Bessent, for example, told Fox ’s Kudlow yesterday that the “fantastic” CPI numbers have led him to ask whether we should get a 50 basis-point rate cut in September

His reasoning is that the Fed should have cut in June and July, had they known the fuller picture the labor market

The motivation for a larger cut would be to “make up” for the missed opportunities earlier this summer, Bessent added

It’s unsurprising that Bessent would lead the charge for a larger reduction

He is backing the stance of the Oval Office that Powell and the Fed have been too slow to normalize monetary policy, and are hampering economic activity as a result

Yesterday President Trump reiterated this call, writing on Truth Social: “It has been ven, that even at this late stage, tariffs have not caused Inflation, or any other blems for America, other than massive amounts of CASH pouring into our Treasury’s coffers.” While analysts aren’t sold on the idea of a larger reduction to the base rate, they’re not ruling it out either

Speaking ahead of the release of the CPI data yesterday, State Street Global’s Tim Graf told Reuters that while are unly to fully bake in a reduction of two clicks, investors may begin to hedge toward the possibility as we get closer to the September meeting

They won’t price “that it will be dered,” he said, “but that the bability is above, say, 0%.” The tone of the FOMC is also ly to turn more dovish, after two dissenters already split from the pack in July over the committee’s decision to keep the base rate at 4.25% to 4.5%

And their stance is ly to be further boosted by the appointment at the next meeting of Trump nominee Stephen Miran—widely seen by the market as a dove who will push for rates to lower

But with the FOMC missing a meeting this month—instead heading for the Jackson Hole Economic Policy Symposium—the committee will have more time, and crucial data, to help inform their decision

For this very reason, a portion of analysts are convinced that contrary to the majority opinion, the July data has lowered the lihood of a cut. “It seems fair to say that the Fed could be considering a move in September, but I don’t think a cut at that meeting is as much of a given as market pricing is implying,” wrote J.P

Morgan Wealth Management’s head of investment strategy, Elyse Ausenbaugh, ing the report’s release. “We will get plenty of data between now and then that could give the Fed pause one more time before taking action in the fourth quarter.” “Do not expect a September rate cut,” was the message from Larry Tentarelli, chief nical strategist for Blue Chip Daily Trend Report

Tentarelli wrote: “The July payrolls report missed forecasts and the unemployment rate ticked higher—signs of a potentially weakening labor market

Meanwhile, 12-month CPI came in above the prior month for June and now for July. “While one data point does not make a trend, two consecutive months of higher 12-month inflation will make it difficult for the Fed to justify a rate cut at their September 17 meeting

We remain bullish on the S&P 500 index into year-end, but we do not expect a September rate cut unless the jobs market drops off drastically over the next 45 days.” Jobs data released in September will hold more sway over the Fed’s decision, added Bill Adams, chief economist for Comerica Bank, who said the July CPI report made it less ly for the Fed to cut in September because inflation came from “sticky service prices rather than tariff-affected goods.” Introducing the 2025 Fortune Global 500, the definitive ranking of the biggest companies in the world

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