Fed set for 'dovish' 25bps cut next week, but risks pressure for bigger Nov. cut
Investing.com -- The Federal Reserve looks set to deliver a"dovish" quarter point rate cut next week, leaving the economy exposed to risks of softer economic data that would likely pressure the central bank into a reactive 50 basis point cut in November.
"There is a high risk of some weak news during this period, as political uncertainty favors soggy spending, cautious hiring and perhaps a bit more firing," it added. The recent producer price index for August came in hotter than expected, but showed soft components that align with the Fed's preferred PCE measure of inflation, suggesting inflation pressures may be easing. While this may have potentially eased jitters from FOMC following a core CPI print for August that overshoot estimates, Evercore ISI believes. Fed officials"will be more sensitive to the trend in housing services than volatile components of inflation in PPI.
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