Observers counter Wall Street view that Fed won't agree to 50 bps rate cut

The weak July nonfarm payrolls report fuelled market concerns that the Federal Reserve was cutting rates too late, but a 50-basis-point cut by policymakers in September is highly unlikely as an ultra-dramatic cut could be seen as a wake-up call. "We don't want to overreact to any one month's data", Chicago Fed President Goolsbee said. In addition, there are many economists who follow the Fed closely who immediately countered the idea of a 50 basis point rate cut. Gregory Daco, chief economist at Ernst Young, said, "Given the hawkish bias of Fed officials, I would expect a rate cut in September to be fine, but a 50-basis-point cut would meet with resistance".Joseph Lavorgna, chief economist at SMBC Nikko Securities, said, "If the Fed cuts rates by 50 basis points, it will cause panic and the market is too far ahead of expectations for a significant rate cut". During Powell's tenure as Fed chairman, the FOMC only makes super-substantial interest rate adjustments in emergencies.