On September 18, Caixin reported that the biggest suspense about the Fed's interest rate cut this week is whether it will be a 25 basis point or 50 basis point cut. Jeffrey Gundlach, the CEO of DoubleLine Capital and the "bond king", is betting that the Federal Reserve will start a rate-cutting cycle with a 50 basis point cut.

Gundlach believes that the Federal Reserve is too "lagging", and he bets that the Federal Reserve is likely to cut the benchmark interest rate by 50 basis points on Wednesday and a total of 125 basis points by the end of the year. He pointed out that the US economy has entered a recession and the Federal Reserve has maintained a tight policy for too long. The latest rate decision by the Federal Reserve will be announced at 2:00 a.m. Beijing time on Thursday.

"I think they will cut rates by 50 basis points-this seems too much," he added, "The Federal Reserve is far behind the situation and they should take unified action."

Gundlach accused the Federal Reserve that it should have cut rates earlier.

"We are already in a recession. I see a lot of layoff announcements," he said.

This Fed meeting is very special. Generally, the market's bets are very clear on the eve of the Fed meeting, and it is rare to have such indecisiveness. After last week's data initially dashed hopes for a 50 basis point rate cut, the market now expects a greater likelihood of a 50 basis point cut (65%).

Jim Bianco of Bianco Research said on Tuesday that "usually, the odds on the eve of the meeting are either 95%-100% or 0%-5%. Therefore, this level of uncertainty is unprecedented."

However, according to the company's research data, out of 118 Wall Street economists, 101 expected a 25 basis point rate cut, 13 expected a 50 basis point rate cut, and 4 predicted no change.

Bianke said, "I can't find another example like this, where there is such a big difference between Wall Street and market pricing on the eve of the meeting."

However, there is increasing support on Wall Street for a 50 basis point rate cut. For example, JPMorgan's chief U.S. economist Michael Feroli stated last week that the Fed should "cut the policy rate by 50 basis points to adapt to the constantly changing risk balance."

In addition, former Federal Reserve 'number three' (former New York Fed chair) William Dudley also stated last week that there is still a possibility of a 50 basis point rate cut at the Fed's September interest rate meeting. He said, "I believe there are strong reasons for a 50 basis point rate cut. I know what I'm fighting for."

Editor / jayden