Fed Should Admit Its 'Mistakes,' Jefferies Analyst Says, Making A 'Cogent' Case For 75 Bps Rate Cut

Fed,,Federal,Reserve,With,Interest,Rate,Cut,Concept,,Small,Cube

Jefferies Chief Market Strategist David Zervos believes the Federal Reserve should consider a bold shift in monetary policy, making the case for deeper interest rate cuts during the upcoming meeting.

Makes A Case For A Larger Cut

Zervos argues that the Fed’s employment narrative has unravelled. “If you look at the revisions… it's 1.5 million jobs that have been revised away in 2024. It's an incredibly large number,” he says, during his appearance on CNBC’s ‘Squawk on the Street’ on Wednesday.

These revisions, he says, bring focus back to the employment side of the Fed’s dual mandate, making the case for a larger cut during the Fed’s Open Market Committee meeting next week.

See Also: The Great Fed Pivot Is Here—Jeremy Siegel Backs Sub-3% Rates Ahead

While markets expect a modest 25 basis point cut in interest rates, Zervos says the case for a larger cut is clear. He says there’s a “very cogent case” for a 75 basis point cut, but doesn’t think it could get through politically. “I don’t think it’ll even be on the docket.”

Zervos says the Fed must be willing to change course based on the evolving data. “I think you can make an argument, an aggressive argument, that it's time to kind of really put it in reverse and say, hey, we made some mistakes,” but he doesn’t think the Fed will do that.

Jobs Revision Prompts Fed Cut

Earlier this week, the Bureau of Labor Statistics released its annual preliminary benchmark revision, cutting previously reported nonfarm employment gains by 911,000 jobs from April 2024 to March 2025.

While this has prompted calls for rate cuts from several prominent individuals, a few others, such as economist Peter Schiff, have warned that cuts could “only harm the labor market,” citing the weakening U.S. Dollar, higher consumer prices and the potential increase in long-term interest rates.

Following another weak jobs report, Labor Sec. Chavez-DeRemer said, "Jerome Powell needs to do his job and cut those interest rates now." But rate cuts now will harm the labor market by weakening the dollar, driving up consumer prices, and pushing long-term interest rates higher.

— Peter Schiff (@PeterSchiff) September 8, 2025

According to the CME Group’s Fed Rate Monitor Tool, there is currently a 93.7% possibility of a 25 bps cut in interest rates in September, alongside a 76% possibility of another such cut in October.

Read More:

• Trump’s Rate Cut Demands Are ‘A Recipe For A Bubble,’ Says Ruchir Sharma: Points To ‘AI Mania,’ Surging Equity Markets As Red Flags

Photo Courtesy: eamesBot on Shutterstock.com