Analysts: The threshold for the Federal Reserve to cut interest rates by 50 basis points next week is high, and a large-scale rate cut will do more harm than good

Kieran Williams, Head of Asian Currency at InTouch Capital Markets, said: "The bar for a 50 basis point rate cut is high, and core inflation would likely need to surprise significantly below expectations to bolster dovish sentiment. A significant rate cut next week seems unlikely given the stickiness of service prices and the Fed's tendency to signal a gradual approach, but the data will influence how aggressively the market prices in its easing path towards the end of the year." Matt Simpson, Senior Market Analyst at City Index, also said: "I believe a 50 basis point rate cut would do more harm than good to market confidence at this point. Furthermore, the Fed may want to save face and not fully succumb to Trump's wishes." Simpson noted: "Market pricing currently reflects expectations of three rate cuts over the next three meetings, and the Fed is well-positioned to align with these expectations or increase the probability of a rate cut in 2026 without being forced into a 50 basis point cut next week." (Jinshi)