Traders Anticipate Potential 0.5% Rate Cut by the Fed

Traders are weighing the possibility that the Federal Reserve could cut its key interest rate by 0.5% next week, though most expect a smaller 0.25% reduction on Sept. 17. Market sentiment shifted toward easing after August’s weak jobs report showed only 22,000 nonfarm payroll additions and a 4.3% unemployment rate. While some FOMC members may support a larger cut, the majority are unlikely to approve a half-point reduction. Economists predict the Fed may cut rates in September, skip October, and lower again in December, balancing inflation risks with a soft labor market.