Pulis: The Federal Reserve is expected to cut interest rates by 50 basis points this week.

BL Research's Chief U.S. Economist, Blerina Uruci, has published a forward-looking commentary on this week's Federal Reserve monetary policy meeting. It is expected that the Federal Open Market Committee (FOMC) will cut interest rates by 50 basis points in the September meeting, which is a difficult decision. Given the proximity of the Fed's announcement of its interest rate decision, there is unusually high uncertainty about the extent of policy easing. This level of uncertainty contradicts Chairman Powell's earlier remarks, where he stated that the timing and scale of the first rate cut in this cycle are significant, potentially indicating that the Fed will clearly communicate its first rate cut. Furthermore, around the time of Powell's speech at a global central bank meeting, it was also communicated that the Fed would cut rates by 25 basis points at each meeting this year, in response to recent cooling in the labor market and slowing inflation. The FOMC's communication before the blackout period did not indicate a 50 basis points rate cut, which has raised concerns among investors about how the FOMC will interpret labor market data and how they will react to a further rise in the unemployment rate. Over the next 12 months, the Fed may cut rates by around 125 to 150 basis points, while market pricing reflects a cut of 250 basis points. Moreover, if the Fed quickly takes policy action and financial conditions further ease after the September meeting, this will provide further support to the economy and prevent a slowdown.