Federal Reserve officials hinted that a rate cut may be coming soon, with economists predicting a 25 basis point cut in September

When the market speculated whether there would be a 50 basis point rate cut in September, Federal Reserve officials "followed the trend" and hinted at an imminent rate cut.

On Friday, August 9th, Boston Fed President Susan Collins, who will have voting rights at the 2025 Federal Open Market Committee (FOMC) meeting, stated in a media interview that if inflation continues to decline against a backdrop of a strong labor market, the Fed may start easing its interest rate policy. Collins said:

"If the data continues to develop as I expect, I do believe it would be appropriate to begin adjusting policy soon. My expectation is that with a healthy labor market, (inflation) will gradually return to the Fed's 2% target."

Collins did not specify the exact timing and pace of her predicted monetary easing decision, but rather stated that she expects rates to decline over the next few years. She also mentioned that Fed policymakers will receive more data before the next FOMC meeting in September, and she did not want to disclose it in advance. "I think the pace of economic growth should be able to maintain a robust labor market."

On the same day as Collins' speech, former U.S. Treasury Secretary Summers indicated that a 50 basis point rate cut in September might be appropriate. This stance represents a 180-degree shift from his previously more hawkish views.

Wall Street News previously mentioned that the post-FOMC meeting statement last week made a significant shift, changing from "still highly concerned about inflation risks" to focusing on the risks faced by the dual mandate of employment and inflation, seen as paving the way for future rate cuts. After the announcement of the July U.S. non-farm payroll numbers falling far below expectations, Wall Street Commentary on non-farm payroll reports stated that the current issue is no longer whether there will be a rate cut in September, but whether it will be a 50 basis point cut.

Following the release of non-farm payroll data, several Wall Street institutions adjusted their expectations for Fed rate cuts this year.

Among them, Goldman Sachs stated that if August employment continues to be weak, there is a possibility of a 50 basis point rate cut in September. Citigroup indicated that rate cuts of 50 basis points are possible in both September and November, and the policy rate range for next year will decrease to 3% to 3.25%. J.P. Morgan also expects rate cuts of 50 basis points in both September and November, and further believes that there is a reason for the Fed to conduct emergency rate cuts between meetings before the September meeting.

A recent survey released by the media on Friday showed that the vast majority of surveyed economists expect that the Fed's monetary policy meeting on September 17th to 18th will decide on a rate cut of only 25 basis points, different from the larger rate cuts recently advocated by some major Wall Street banks.

In the survey, nearly three-quarters of economists predicted that the Fed will lower the federal funds target range by 0.25% to 0.5% in September, i.e., a 25 basis point cut, while most of the remaining economists predicted a larger rate cut According to the median forecast, economists believe that there is only a 10% chance of the Federal Reserve making a rare emergency rate cut before the scheduled meeting