Fed cuts rates 25bps as labor market weakens – OCBC

At the September meeting, the FOMC decided to lower the target range for the Fed funds rate by 25bps to 4.00-4.25%, in line with expectations, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Miran pushes for 50bps, but FOMC unites on smaller cut

"The Statement cited the 'shift in the balance of risks'. Dovish elements included: 1/ all voting members supported a rate cut - Miran voted for a 50bp cut, while the rest of the voting members supported the 25bp cut decision."

"2/ The 2025 median dot moved lower by 25bps, i.e. pointing to additional 50bps of cuts before year end, although the dots are skewed to the upside (one dot moving higher will move the median dot higher); the 2026 median dot was as expected given the lower 2025 median dot."

"Powell characterised yesterday’s rate cut as a 'risk management cut', acknowledging that a very different picture of risks has emerged as the labour market has begun to cool off versus the threats on the inflation front. But he expects the increases in goods prices to continue to build up over the course of the rest of this year and into next year. The FOMC is in a meeting-by-meeting situation."