While the US Federal Reserve’s (Fed) new interest rate decision to be announced tomorrow is eagerly awaited, the markets seem to be very confused. The market expectation of 50 basis points, which fell to 2% last week, rose to 60% this week.

WSJ 50 basis points should be cut

The Wall Street Journal, one of the heavyweights of the US financial media, shared an article titled ‘Interest rates are too high, the Fed should cut them by 50 basis points’ on its website on Sunday. In the text, it was written that inflation fell rapidly to 2.5%, and the big difference between core inflation and the Fed’s 2% target was due to inflation in the automobile and real estate sectors. It was also stated in the text that the labour market was getting weaker. It is also known that the Fed’s most important statistics are always related to the labour market.

Financial Times followed

Following this article of the Wall Street Journal, another financial media giant Financial Times published a similar news/article. Here, too, it was written that a 50 basis point cut would relieve the economy, which is now stuck.

It was noteworthy that there was no objection or reaction from the Fed to these two articles. Even William Dudley, the head of the Fed’s New York branch, emphasised that he expected the Fed to cut rates by 50 basis points.

In CME, which shows the market expectation in futures transactions, the expectation of a 50 basis point cut is up to 67% before tomorrow’s decision…

Yesterday, Elizabeth Warren, one of the important names of the Democrats, also called for the Fed to start cuts tomorrow with 75 basis points. However, the markets do not have such an expectation for the moment.