The following are brief expectations for today's FOMC September policy meeting as compiled from the related notes of 10 sell-side strategy and research desks.

Overall, 9 desks expect the FOMC to deliver a 25bps rate cut, and only 1 desk (MUFG) expects a 50bps rate cut.

On the USD front, eFX's LSI and ISI Indicators don't show a clear USD build-up in the run-up the meeting but there is a preferred strategy among sell-side to fade any hawkish reaction from the FOMC by specifically looking to sell USD/JPY rallies targeting a move below 140 over the coming weeks. 

MUFG: MUFG expects the FOMC to cut rates by 50bps today, framing this move as a proactive measure to align the monetary policy stance with current economic realities. If the 50bps cut occurs, the 2s10s curve is likely to steepen, potentially reaching new cyclical highs not seen since June 2022. USD/JPY could drop below the 140-level, with the possibility of reaching new lows quickly.

Morgan Stanley: The FOMC is anticipated to cut the fed funds rate by 25bp to 5.125%. The accompanying statement is expected to acknowledge progress on inflation while addressing risks in the labor market. MS FX strategists recommend short USD/JPY positions as the Fed begins its easing cycle.

Danske: A 25bp rate cut from the Fed is anticipated, accompanied by dovish forward guidance. Following the cut, an initial knee-jerk reaction is expected to push EUR/USD lower, driven by market repricing.

ING: Our economists are calling for a 25bp cut by the Fed today, but admit it is an exceptionally close call. Markets are narrowly favouring a 50bp reduction. The dollar should rally on a 25bp move. However, if Powell and Dot Plots are as dovish as we think, dollar gains may soon prove unsustainable

Goldman Sachs: Goldman Sachs forecasts a 25bp rate cut at the September meeting. A 50bp cut is seen as a reasonable precaution but is less likely given recent Fed communications.

Credit Agricole: Credit Agricole expects the FOMC to deliver a 25 basis point rate cut, with a 50 basis point cut considered a notable risk. The firm anticipates Powell to emphasize a data-dependent approach and maintain a soft landing outlook for the US economy. The new dot plot is expected to indicate a front-loaded but not overly aggressive easing cycle.

Nomura: Nomura expects a 25 basis point rate cut by the FOMC to initially strengthen the USD but predicts that the USD may weaken during Fed Chair Powell’s press conference. A larger cut of 50 basis points could lead to more significant USD weakness. The firm has also downgraded its USD/JPY forecast and recommends selling USD/JPY and major yen-crosses if there is a rebound.

BofA: BofA expects the FOMC to announce a 25bps rate cut. They predict the Fed’s dot plot will be above market expectations, potentially signaling a more cautious approach to future rate cut.

Barclays: Our baseline is that the FOMC will deliver a 25bp rate cut this week, with the adjusted statement leaving the door open for more aggressive moves in upcoming meetings based upon the dataflow. However, with markets having priced in a 50% likelihood of a 50bp cut, there is a risk that the FOMC will take advantage of this renewed optionality by delivering a steeper cut. We expect the median dot in the updated SEPs to continue to project Q4/Q4 GDP growth in the vicinity of 2% through 2026 (and in 2027).

HSBC: HSBC’s economists expect a 25bp cut, with the dots showing 50bp more cuts in 2024, and 75bp of easing in 2025. If correct, it would point to some knee-jerk USD strength. We continue to believe there is a downside asymmetry for the USD around today’s FOMC. A