September Interest Rate Decision: A 25 basis point rate cut is almost certain, with three major highlights that may ignite the market.

On September 17, the Fed will convey a "three-part" message to investors at the upcoming policy meeting: To what extent have officials adjusted their outlook to reflect a weak labor market? How divided is the Fed becoming? Does the arrival of Governor Milan bring partisan leanings to the Fed? Although the Fed wants to avoid political disputes, it is steadily being dragged into the polarized dialogue of Washington. Republicans accuse the Biden administration's appointees of pushing the Fed into inappropriate areas such as climate change and racial equality, and of using interest rate cuts to garner votes during the 2024 presidential campaign. Democrats, on the other hand, blame former President Trump's pressure campaign, including attempts to fire former President Biden's appointee Governor Cook, forcing Fed Chair Powell to step down, and placing Milan into the Fed. The extent and speed of rate cuts remain contentious issues, with analysts indicating that this week's meeting may see an unusually high number of dissenting votes, with those concerned about inflation likely supporting no rate cut, while Milan and two other Trump appointees may advocate for a larger cut of 50 basis points, believing that inflation risks have eased and the labor market is weakening since this summer. Fed Governor Waller and Vice Chair for Supervision Bowman voted against rate cuts at the July 29-30 meeting, stating that cuts should have been made then, and subsequent labor market reports have intensified their concerns about employment. Both officials are on a list of 11 potential candidates to succeed Powell next year. The market is currently pricing in that the Fed will continue with 25 basis point cuts at the meetings in October and December, while next year's pace is more uncertain. Michael Feroli, Chief U.S. Economist at JPMorgan, stated that the median forecast will reflect three 25 basis point cuts this year, rather than the two predicted in June. However, he also noted that concerns about inflation will not disappear, and that "when voting against, doves have less ability to shape the message of a statement recognized by the majority."