Shelter inflation the last piece of the puzzle

The 25bp vs 50bp debate, which seemed settled following Governor Christopher Waller’s cautious speech shortly after the August Employment Report, was blown back open this week by what appeared to be coordinated pieces in the FT and WSJ, suggesting that the call is a lot closer than markets had previously thought. Our view remains that the data are consistent with a labour market slowdown rather than collapse, which is why we think a more measured 25bp move is warranted, with housing inflation's reluctance to moderate quickly another possible reason to favour a smaller cut.