What’s the Outlook for the Federal Reserve’s Interest-rate Policy?

Core Insights - The Federal Reserve is expected to implement a second consecutive 25 basis point "risk management" cut in response to a softer US jobs market and a slight easing in September core CPI [1] - Market focus will be on the press conference for signals regarding future rate cuts, with a further 25 basis point cut by December being a possibility, though not guaranteed [2] - The Federal Reserve is experiencing internal divisions due to political pressure and differing views on the inflation target, complicating the decision-making process [3] Economic Context - The US economy is showing resilience, raising questions about the duration of the softer labor market data, while the ongoing government shutdown complicates the availability of official data [5] - Increased US trade tariffs and broader price pressures highlight the need for caution, as political interference could undermine the Fed's independence and credibility [4] - Current inflation remains above the official target of 2%, with some estimates suggesting it may average around 3% in the near future [3][6]