US interest rates poised for cut amid recession fears

Financial markets are anticipating a significant interest rate cut by the US Federal Reserve, with expectations for a reduction of either a quarter or half percentage point. This comes as the US economy shows signs of weakening, raising concerns about a potential recession. The Federal Open Market Committee is set to conclude its policy meeting on Wednesday, marking the first rate cut since early 2020. The current target range for interest rates has been held steady at 5.25%-5.5% since July of the previous year. In contrast, the Bank of England is expected to maintain its current rate following a quarter-point reduction in August. Recent economic data indicates a slowdown in output, but UK policymakers are particularly concerned about wage growth and inflation trends. A Reuters poll suggests that the headline consumer price inflation rate for August will remain at 2.2%, unchanged from the previous month. Market participants are divided on the size of the Fed's rate cut, with some analysts predicting a 50 basis point reduction. Economists argue that current policy is overly restrictive, and a more aggressive easing cycle may be necessary to prevent further economic decline. Expectations are building for additional cuts in November and December, with markets pricing in a total of 100 basis points of reductions by year-end. Overall, the anticipated rate cuts reflect a broader strategy to stimulate the economy amid rising inflation and decreasing demand, as central banks navigate the challenges posed by a potential recession.