Warren pressures Fed to cut rates by 75 basis points

Many investors and some economists worry that the Fed has waited too long, leaving the labor market and economic growth on thin ice and injecting volatility into financial markets. The latter was evident in the Treasury market on Friday, when traders suddenly resumed bets on a 50 basis point rate cut. The November presidential election also puts the Fed's decision-making in an uncomfortable position. Republican candidate and former President Trump warned that the Fed should not cut rates before the election, while Democratic Senator Elizabeth Warren has pressured officials to cut rates by 75 basis points. "This is a critical action," said Priya Misra, portfolio manager at JPMorgan Asset Management. "Soft landings are very rare." JPMorgan was the only one of the largest U.S. banks to insist that the Fed would cut by 50 basis points. But while other banks have returned to expectations of a 25 basis point cut, the bank's U.S. chief economist Michael Feroli reiterated in a note to clients on Friday that a 50 basis point cut was "the right thing to do." Misra also hopes the Fed will cut rates by 50 basis points at the outset, but she said a 25 basis point cut seems slightly more likely as policymakers are concerned about the possibility of persistent inflation. She added that if the Fed does cut rates by 25 basis points, the market reaction will depend largely on how officials "interpret" the smaller rate cut. (Jinshi)