The Federal Reserve's September interest rate decision is about to be announced, and Wall Street has not yet reached a consensus on the extent of this rate cut. In the recent market debate on whether to cut interest rates by 50 basis points or 25 basis points, the August CPI report released last week showed that the US core CPI rose more than expected, reducing the possibility of a 50 basis point rate cut; however, US officials recently asked the Federal Reserve to cut interest rates by 75 basis points, and institutions such as JPMorgan Chase continued to be optimistic about the extent of the rate cut, which deepened the suspense of how the Federal Reserve will decide this week.

As the Fed's interest rate decision approaches, gold has become a highly watched asset class in the world. Institutional sources said that gold is an excellent tool to deal with uncertainty in the first half of the rate cut. If the Fed cuts interest rates by 25 basis points this week, gold prices may experience a slight correction in the short term.

According to data updated on September 17th, Beijing time, by the “Fed Watch” column of the Chicago Mercantile Exchange (CME), the probability of a 25 basis point rate cut in September by the Fed is 33%, and the probability of a 50 basis point rate cut is 67%. After the release of the August CPI report in the United States last week, considering that the core inflation in the United States rose more than expected, the market generally believed that the expectation of a one-time 50 basis point rate cut by the Fed would be dashed.

JPMorgan Chase expects the Federal Reserve to cut interest rates by 50 basis points this week, while signaling to the market that more easing policies are coming. The weakening upward pressure on inflation from the job market, coupled with the current level of monetary policy constraints, makes it ideal for the Fed to cut interest rates by 50 basis points this week. JPMorgan Chase economists currently also expect the Fed to cut interest rates by 50 basis points in November and 25 basis points in December.

BlackRock Investment Institute said that the market's expectations for the extent of the Fed's rate cuts seem too optimistic, after all, there is still a risk of rising inflation in the United States. The dynamics of the labor market are key to BlackRock's views. Jean Boivin, head of BlackRock Investment Institute, released his views on September 16 local time, saying: "After the Federal Reserve completed the fastest rate hike since the 1980s, the market has quickly digested the expectation of rate cuts. As the Federal Reserve prepares to start cutting interest rates, the market is digesting the expectation of a rate cut as large as in previous recessions. We think such expectations are a bit too much."

In addition, news that US government officials have asked the Fed to cut interest rates by 75 basis points has also deepened the suspense of how the Fed will make its decision this week. According to overseas media reports, three Democratic senators wrote to Fed Chairman Powell and other relevant policymakers, advocating a 75 basis point interest rate cut to protect the US economy from a potential recession.

Industry insiders said that since the Federal Reserve members are in a silent period before the interest rate decision, traders have only a small amount of data to rely on, and some media reports and related events will also become reference factors that change traders' judgment.

As the suspense over the extent of the Fed's interest rate cuts grows, the stickiness of U.S. inflation has also made the market worry about the risk of a second round of inflation. "The cooling of U.S. inflation may be temporary." Jean Boyven believes that if the United States adds jobs as quickly as it did in the past, then rising inflation is an inevitable result.

JPMorgan Chase CEO Jamie Dimon recently said that the worst possible outcome for the U.S. economy other than a recession is stagflation, a state where rising inflation and unemployment lead to slower economic growth. Although the U.S. inflation rate has dropped to 2.5%, a report released by the Federal Reserve Bank of New York on September 9 showed that consumers' overall views on the market are mixed.

Dimon believes that the probability of stagflation in the US economy in the future is around 35%, which means that the possibility of an economic recession is greater.