Westpac analysts suggest that there is still a pressing need for the FOMC to take out further insurance against downside risks.

“Evident in recent data is further weakness in investment as well as a significant deterioration in business conditions – as assessed by the ISMs. Of greater concern still, growth in employment and hourly earnings have both throttled back. If sustained, these trends will put consumer sentiment and spending at risk. We therefore expect the FOMC to cut the federal funds rate at the October meeting and to remain open to taking further action in coming months. A December cut and those we see in March and June will require a further slowing of growth.”