Fed mouthpiece: If the non-farm payrolls tonight are "explosive" again, a substantial rate cut will be imminent

Fed mouthpiece Nick Timiraos published an article as the August non-farm payrolls are about to be released, saying that tonight's employment report will affect the extent of the Fed's rate cuts.

If the August non-farm payrolls are another bad employment report, it may lead to a sharp 50 basis point rate cut by the Fed, but if employment is good, it will keep the Fed on track to cut rates by 25 basis points. At the Fed's September 17-18 meeting, the focus of the debate was whether to start with a more traditional 25 basis point rate cut or a larger 50 basis point rate cut to prevent an undesirable weakness in the job market.

The August recruitment and employment report, which will be released tonight, will be key to making a rate cut decision. A decent employment report could prompt officials to start a possible series of rate cuts with a 25 basis point rate cut.

Friday also happens to be the last day that Fed officials can communicate publicly before the self-imposed pre-meeting blackout period begins. New York Fed President John Williams and Fed Governor Anthony Waller are scheduled to speak after the jobs report, the last chance to set expectations for the upcoming meeting.

KPMG Chief Economist Diane Swonk said there is a very strong case for a 50 basis point rate cut. The labor market is not in recession, but it is on thin ice. Even with Friday's good data, labor market weakness is increasing.

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