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

Kieran Williams, head of Asian exchange rates at InTouch Capital Markets, said: "The threshold for a 50 basis point rate cut is high, and it may take a surprise that core inflation is significantly lower than expected to provide confidence to the doves. Given the stickiness of service prices and the Fed's tendency to send gradual signals, a major rate cut next week seems unlikely, but the data will affect how aggressively the market prices an easing path to the end of the year." Matt Simpson, senior market analyst at City Index, also said: "I think a 50 basis point rate cut is doing more damage to market confidence than good at the moment. In addition, the Fed may want to save face and not give in entirely to Trump's wishes." "The market is pricing in expectations of three rate cuts over the next three meetings, and the Fed is in a good position to match those expectations or increase the odds of a rate cut in 2026 - without being forced to cut by 50 basis points next week," Mr. Simpson noted.