Federal Reserve Chairman Jerome Powell, who's noncommittal about further interest rate cuts, is facing new pressure to make a third-straight reduction in response to weakening data, volatile markets and a continued bashing from U.S. President Donald Trump.
Markets placed about a 75 percent chance of a quarter-point rate reduction at the Oct. 29-30 meeting, up from 40 percent Monday, after manufacturing and employment figures slumped this week. U.S. stocks tumbled to the lowest since August as fears of a recession increased.
"The flow of the data has increased the case for a rate cut in October notably and markets are pricing it in that way," said Joseph Song, senior U.S. economist at Bank of America Corp. "If the data continue to come in weak, that could get moderates and hawks to come on board to provide some sort of buffer for the economy."