On September 16th, Claudia Sahm, a former Federal Reserve economist and chief economist at New Century Advisors, 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 is looking for."

However, the question now is how much action the Fed should take. Financial markets, usually a guide to the central bank's direction, haven't been helpful in this regard. According to the CME FedWatch Tool, futures markets were focused on a 25 basis point rate cut for most of last week, but on Friday, traders shifted to seeing a 25 or 50 basis point rate cut as equally likely.

Sahm is among those who believe the Fed should take bolder action. She said, "The inflation data alone should be enough to warrant a 25 basis point cut next week, with more to come after that." She argues that the federal funds rate has been above 5% for over a year, already fighting inflation. She said, "The battle is won. They need to start cutting rates. A 50 basis point cut initially is warranted to prevent a potential recession in the labor market."

Sahm stated, "The labor market has been softening since last July. Fed officials need to implement a 50 basis point rate cut and be prepared for further action." (Gold Ten)