After the overnight non-farm data was released, the market's expectation of a 50 basis point rate cut by the Fed increased. "Three top officials" of the Fed, Williams and one of the most influential officials, Bullard, successively made dovish remarks, all supporting a rate cut at the September FOMC meeting. However, neither side explicitly stated the magnitude of the rate cut. There is still controversy over whether there will be a 25 basis point or a 50 basis point rate cut in September.

On September 6th, Goldman Sachs commented in their research report about the speeches of the two, stating that the leadership of the Fed believes that a 25 basis point rate cut in September is the baseline scenario. Goldman Sachs said:

In our view, these remarks are consistent with our expectation that the Fed will cut rates by 25 basis points in September, but if the labor market continues to deteriorate, the leadership of the Fed will be willing to cut rates by 50 basis points in subsequent meetings.

Overnight, the August non-farm data in the United States fell short of expectations, adding further signs of a slowdown in the labor market. However, the unemployment rate dropped from 4.3% to 4.2%, as expected, extinguishing the recession signal triggered by the 'Sam Rule'. Market funds are more divided, with the probability of a pessimistic bet on a 50 basis point rate cut by the Fed in September rising from 40% to 50%, while the expectation of a 25 basis point rate cut is evenly split. Then the speeches of Fed officials began to be evaluated.

Fed official Bullard supported a rate cut and stated that, if appropriate, he would advocate for a 'preemptive' rate cut, with an open attitude towards the magnitude and speed of the rate cut. Bullard believes that there are some downside risks to employment and he will closely monitor the situation. At the same time, he also pointed out that the U.S. job market continues to weaken, but has not deteriorated. The U.S. economy is neither in a recession nor expected to enter one.

The 'new Fed communication agency' immediately poured cold water on Bullard's remarks, stating that Bullard did not explicitly mention a 25 or 50 basis point rate cut, but tends to support an initial 25 basis point rate cut and explicitly retains the option to accelerate the rate cut when new data shows further deterioration, please note the use of 'if' in his wording.

Goldman Sachs also commented that Bullard's speech implied that he believes the baseline scenario for the September meeting is a 25 basis point rate cut, but if the labor market continues to deteriorate, he may support a future 50 basis point rate cut. Goldman Sachs stated that Bullard's description of the U.S. economy is quite positive. Bullard believes that overall economic data indicate a solid performance in the labor market and economy.

In Goldman Sachs's view, Williams, one of the Federal Reserve's "three key figures," seems to have made similar remarks.

Williams stated after the data release that the Federal Reserve has made "significant progress" in maintaining price stability and achieving maximum employment, and the risks associated with these two goals have reached a "balanced" state. The inflation rate is gradually moving toward the 2% target, so lowering the federal funds rate now is appropriate.

Williams also stated that he expects the real GDP of the United States to grow "around 2% to 2.5%" this year, and the unemployment rate will remain around 4% at the end of the year.

It is worth noting that Williams did not express any intention of lowering interest rates by 50 basis points this month. Goldman Sachs commented that these remarks are consistent with their prediction of a 25 basis point rate cut in September.

Editor/Emily