Chances of 50 BPS Fed Rate Cut Increase Ahead of Inflation Data, Here’s the Data!

Jakarta, Pintu News – Markets are starting to factor in the possibility of a 50 basis points (bps) cut in the Federal Reserve (Fed) interest rate in the upcoming FOMC meeting. This comes ahead of the release of CPI and PPI inflation data next week, which could influence the Fed’s decision.

Increased Chance of Fed Rate Cut

Data from CME FedWatch shows an 11% chance that the Fed will cut rates by 50 bps at the upcoming FOMC meeting. This comes ahead of the release of PPI and CPI inflation data by the Labor Department on September 10 and 11.

This opportunity began to be priced in by traders after the release of US jobs data that showed only 22,000 jobs added in August, well below expectations of 75,000. Meanwhile, the unemployment rate rose to 4.3%, close to a four-year high.

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Market Reaction to Labor Data

This latest labor data suggests that the labor market is starting to weaken and the Fed needs to adjust its monetary policy. Jerome Powell has signaled in the Jackson Hole conference that a Fed rate cut may be necessary with rising risks in the labor market.

However, the Fed also has a mandate to keep inflation stable, which is why the upcoming PPI and CPI data will be key in their decision on the rate cut at the September 17 meeting.

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Waiting for Inflation Data Before Making Decisions

According to a Bloomberg report, Federal Reserve Bank of Chicago President Austan Goolsbee said that he has not yet decided on the course of action he will support during the upcoming FOMC meeting. He stated that he wants to get more information, referring to next week’s inflation data.

Meanwhile, Fed Governor Chris Waller has stated that they need to make a rate cut at the September 17 meeting. Waller is not worried about the inflation side and warned that they need to get ahead of the sharp slowdown in the labor market.

Conclusion

With disappointing jobs data and the chances of a rate cut increasing, financial markets may see a significant change in Fed policy. The decision to be made at the upcoming FOMC meeting will not only be influenced by the latest inflation data, but also by the changing labor market conditions.

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Reference

• Coingape. September 50 BPS Fed Rate Cut Odds Climb Ahead of CPI, PPI Data. Accessed on September 8, 2025
• Featured Image: Generated by Ai