The Federal Reserve stands at a pivotal crossroads this week. If policymakers deliver only a quarter-point rate reduction at Tuesday’s meeting, they risk allowing economic conditions to deteriorate before policy can catch up, deVere Group cautions.
The global financial advisory giant is calling for a half-percentage-point cut while acknowledging that markets expect a smaller move.
“The US central bank has little room for hesitation,” says Nigel Green, CEO of deVere Group. “The labor market is losing momentum, unemployment jumped to a four-year high, and hiring has stalled. A 25-basis-point trim would leave policy trailing the reality on the ground.”
August employment data underscored the slowdown. Nonfarm payrolls added just 22,000 jobs, far below the 75,000 forecast, while the unemployment rate climbed to 4.3 percent from 4.2 percent in July.
The weak hiring represents a dramatic deceleration from earlier in 2025, when monthly job gains routinely exceeded 100,000. Futures tracked by the CME FedWatch tool show investors pricing roughly 88 percent odds for a quarter-point cut at the September 17 meeting.
“Markets are conditioned for caution, but the economy demands something bolder,” Green continues. “A half-point cut would reinforce consumer confidence and business investment at a time when trade frictions and rising costs are already weighing on activity.”
Trade tensions are adding complexity. Tariff policies are pushing up import costs across sectors, while energy prices have climbed through late summer. Core inflation reached 2.9 percent in August, up from 2.7 percent in July after declining for four straight months earlier this year.
“Inflation remains manageable near the Fed’s 2 percent target range, but forward-looking indicators of hiring and output point to a broader slowdown,” notes the deVere chief executive. “The greater risk is a loss of growth momentum. The Fed’s dual mandate requires decisive action when employment weakens.”
Green points to the Fed’s recent history as a cautionary tale. “In 2021, the central bank misread inflation persistence, holding rates near zero while prices surged. Policymakers called it ‘transitory,’ only to scramble with aggressive hikes later. That delayed response forced steeper tightening and rattled both markets and households.”
Global markets are positioning for easier policy. Treasury yields have fallen to three-month lows, the dollar has softened against major currencies, and US equities are approaching record highs as traders bet on lower borrowing costs.
Fed Governor Christopher Waller recently signaled support for a quarter-point cut at this week’s meeting, with potential for additional reductions over the next three to six months depending on economic data.
“The Fed has an opportunity to demonstrate leadership,” Green adds. “A half-point cut now would not be reckless. It would be a strategic step to protect growth and safeguard jobs when the labor market shows clear signs of stress.”
The employment report revealed troubling details beyond the headline numbers. More than one-quarter of unemployed workers have now gone without jobs for over six months, the highest level since June 2016, according to Labor Department data.
deVere expects the central bank to deliver at least 75 basis points of total easing by year-end if labor market conditions continue weakening, starting with this week’s decision and followed by additional reductions in November and December.
“Investors and the broader economy need reassurance that the Federal Reserve is prepared to move with the pace of change,” concludes Green. “A larger cut this week would send that signal and help secure the expansion.”
