Dudley Says One or Two Fed Cuts After Sept. Is a 'Close Call'

Interest Rate Expectations - The market widely anticipates a 25 basis points (0.25%) interest rate cut by the Federal Reserve this week [1] - The debate centers on whether the Fed will signal one or two more rate cuts after September [2] - The market is pricing in rate cuts that could bring the federal funds rate down to approximately 3% by the end of next year [7] Labor Market & Economic Outlook - Softening labor market indicators, with payroll employment growth at only 30,000 per month in the last three months, are a key concern driving potential rate cuts [5] - The market generally agrees with the view that downside risks to the labor market outweigh upside risks to inflation, justifying rate cuts [11] - There's a possibility that steeper rate cuts could lead to a reacceleration of inflation and a deterioration in the dollar's value [10] Fed Policy & Internal Dynamics - Most members of the committee are expected to align with the Chairman's direction on rates, with disagreements primarily focused on timing [15][16] - The influence of a newly appointed member from the administration is expected to be limited during the upcoming meeting [19][21] - The degree of disagreement among members tends to be small, as everyone is evaluating the same economic information [22]