Federal Reserve Mouthpiece: If non-farm payrolls 'bomb' again tonight, a significant rate cut is imminent

"Federal Reserve mouthpiece" Nick Timiraos published an article on the eve of the August non-farm data release, stating that tonight's employment report will affect the Fed's rate cut range. If the August non-farm is another poor employment report, it may lead to a substantial 50 basis point rate cut by the Federal Reserve. However, if employment conditions are good, it will keep the Fed on track for a 25 basis point rate cut. At the Federal Reserve meeting from September 17th to 18th, the focus of debate is whether to start with a more traditional 25 basis point rate cut or a larger scale 50 basis point reduction to prevent unwanted weakness in job market.

The recruitment and employment reports for August which will be released tonight are key in making decisions about interest cuts. A decent jobs report could prompt officials to begin what might be a series of cuts starting at 25 basis points. Friday also happens to be last day before self-imposed silence period begins when Fed officials can communicate publicly. New York Fed Chairman Williams and Federal Reserve Board member Waller are scheduled to speak after job reports are released; this is their final chance set expectations for upcoming meetings.

KPMG Chief Economist Diane Swonk said: "There are very strong reasons supporting a 50-basis-point interest-rate cut. The labor market has not fallen into recession but it’s already walking on thin ice. Even if Friday's data isn't bad, labor market weakness is intensifying."