{"id":15952,"date":"2025-09-14T15:12:07","date_gmt":"2025-09-14T15:12:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/15952\/"},"modified":"2025-09-14T15:12:07","modified_gmt":"2025-09-14T15:12:07","slug":"what-wall-street-is-saying-about-the-central-banks-next-rate-decision","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/15952\/","title":{"rendered":"What Wall Street is saying about the central bank’s next rate decision"},"content":{"rendered":"\n

Weak labor market data overshadowed a sticky inflation print last week,<\/a> keeping investor expectations intact that the Federal Reserve will cut interest rates at its policy meeting on Wednesday.<\/p>\n

Government data released Thursday showed that consumer prices rose 0.4% in August from the previous month, an uptick from July’s 0.2% increase. Meanwhile, separate data showed weekly jobless claims rising to 263,000 \u2014 the highest in nearly four years<\/a>, up from a revised 236,000 the prior week.<\/p>\n

The Fed weighs its dual mandate of full employment and price stability when deciding whether to change interest rates. Given the dynamic of a slowing jobs market coupled with sticky price increases, Wall Street strategists told Yahoo Finance that the Fed has a complicated decision ahead.<\/p>\n

“It’s the worst kind of setup for the Fed,” Claudia Sahm, New Century Advisors chief economist and former Federal Reserve Board economist, told Yahoo Finance. “They will not be cutting because we have good news on inflation. They’ll be cutting because we have bad news on employment.”<\/p>\n

\"Federal Federal Reserve Chair Jerome Powell speaks during a press conference after the central bank’s July meeting. The central bank is widely expected to cut interest rates next week. (Reuters\/Jonathan Ernst\/File Photo) \u00b7 Reuters \/ Reuters <\/p>\n

Sahm expects the Federal Reserve to cut rates by 25 basis points during its two-day meeting this week. She noted, though, that inflation is “still too firm.”<\/p>\n

Other strategists agreed: “Inflation is still elevated. It’s been elevated, and it’s moving in the wrong direction right now,” Collin Martin, fixed income strategist at Schwab Center for Financial Research, told Yahoo Finance.<\/p>\n

Sticky inflation may keep the Fed cautious after September, RSM chief economist Joe Brusuelas said.<\/p>\n

“Yes, you’re going to get your rate cut out there in trading land,” Brusuelas told Yahoo Finance. “But I have to tell you, the underlying tenor of the data doesn’t suggest that it’s a lock that you’re going to get three rate cuts before the end of the year.”<\/p>\n

Read more: How jobs, inflation, and the Fed are all related<\/a><\/p>\n

As of Friday, investors were pricing in a 76% probability of three rate cuts this year<\/a>, according to the CME FedWatch, as the labor market shows increasing cracks.<\/p>\n

Thursday’s jobless claims data was the latest to underscore the slowdown. A sweeping jobs revision<\/a> released earlier this week showed the US employed 911,000<\/a> fewer people between April 2024 and March 2025 than originally reported.<\/p>\n

Still, the slowdown doesn’t appear to be pushing the economy over a cliff.<\/p>\n

“We’re not getting this hard landing like collapse in the job market,” Economic Cycle Research Institute co-founder Lakshman Achuthan said. “This could get rough at some point … but it’s not yet.”<\/p>\n

Story Continues <\/p>\n

Despite concerns about the economy and job market, Wall Street strategists are still optimistic that AI will power stocks’ bull run further<\/a> into 2026. This week, Oracle’s (ORCL<\/a>) robust AI backlog stunned investors, underscoring the tech sector’s strength.<\/p>\n

“With robust tech earnings momentum and imminent Fed rate cuts ahead, we do not see elevated valuations as a reason to shy away from diversified exposure to the sector,” UBS Global Wealth Management global head of equities Ulrike Hoffmann-Burchardi said.<\/p>\n

“More broadly, we see room for further upside in US equities, with our end-2025 S&P 500 target at 6,600 and end-June 2026 target at 6,800,” she added.<\/p>\n

The Nasdaq (^IXIC<\/a>) topped 22,000 for the first time this week, on pace to log its fifth consecutive record.<\/p>\n

The S&P 500 (^GSPC<\/a>) and Dow Jones Industrial Average (^DJI<\/a>) also touched new highs, with the blue-chip index crossing 46,000 for the first time ever.<\/p>\n

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre<\/a>.<\/p>\n

Click here for in-depth analysis of the latest stock market news and events moving stock prices<\/a><\/p>\n

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