Deutsche Bank analysts point out that not long ago today’s FOMC was perhaps gearing up to be closer to a 50/50 call between a 25bp or 50bp cut, however, the latter looks a lot less likely now with markets only pricing in about a 15% chance of that happening. 

“Our US economists also expect a 25bp cut which mirrors the consensus. The bigger focus will be on what the Fed signals about the expected policy trajectory in the coming months. Our US economists note that a continued dovish bias should be evident in the statement language, Summary of Economic Projections and Chair Powell’s press conference. The latter in particular should echo the narrative that, while the baseline outlook for the economy remains favorable, officials are attuned to significant risks emanating from softer global growth and elevated trade uncertainty. Our colleagues do not expect the September rate cut to be the last of this cycle though. With accumulating evidence that the economy is slowing amid greater sensitivity to the trade turmoil, they recently adjusted their call to reflect a further cumulative 75bps of rate cuts after this meeting, specifically at the October, December and January get togethers.”