Former Federal Reserve economist and chief economist at New Century Advisors, Claudia Sahm, said in an interview last Friday: "We've had two more months of good inflation data since the last Fed meeting, which is what the Fed has been asking for." However, the question now is how much action the Fed should take. Financial markets, a compass for the central bank's direction, haven't been helpful in this regard. According to the CME Group's FedWatch tool, futures markets focused on a 25 basis point rate cut for most of last week, but on Friday, traders shifted to an almost equal likelihood of cutting 25 or 50 basis points. Sahm is one of those who believes the Fed should take a bigger step. She said: "The inflation data alone is enough to get us a 25 basis point cut next week and then there should be a whole string of cuts after that." She argues that the federal funds rate is already above 5% and has been for over a year to fight inflation. "That fight has been won," she said, "they need to start cutting." This means cutting 50 basis points right from the start, to prevent a potential recession in the labor market. "The labor market has been softening since last July," she said, "so, it's partially a re-calibration. We got more information. The Fed officials need to make this 50 basis point cut and be ready to act further." (Gold Ten)