Nick Timiraos of the "New Fed News Agency" has published another article, which may be his last article before the Fed's decision. Judging from the title "The Fed is ready to cut interest rates, and the first rate cut is in doubt", the "first rate cut" is still undecided.
If this article was written at the behest of the Fed, then there is a high probability that the rate will be cut by 50 basis points.
The reasons are as follows:
First, the article mentioned "50 basis points" more times than before, and quoted the views of former Fed senior adviser English and Dallas Fed President Kaplan on a 50 basis point rate cut.
Second, the article said a very critical sentence "Powell may face internal opposition, and no Fed official has voted against policy decisions in the past two years" - what will be opposed this time? If the rate cut is 25 basis points, it can be accepted by all Fed officials, but some people prefer 50 basis points. But if the rate cut is 50 basis points, then there will be dissenting votes.
If it is only the author's own analysis, then there is a high probability of a 25 basis point rate cut - because the Fed has remained silent until this moment, and only a "25 basis point rate cut" can make the Fed silent. Revealing "a 25 basis point rate cut" at this moment is far from waiting until the last minute to announce it.
Because after the announcement at 2:00 a.m. on Thursday, there will be a Powell press conference half an hour later, when some "dovish" remarks can be made to appease the market. If "a 25 basis point rate cut" is revealed before the meeting, the market will usher in a long sell-off. Perhaps the Fed is still arguing with each other, and Powell himself tends to cut interest rates by 50 basis points, but from a political point of view, a decision-making error of a 50 basis point rate cut may be more serious than a decision-making error of a 25 basis point rate cut. Powell may wait until everyone is tired of arguing and build a reasonable consensus.
