Following the release of the U.S. September non-farm payrolls report last Friday, market expectations for the extent of the Federal Reserve's rate cuts this year have dramatically reversed.

Data from the Chicago Mercantile Exchange's FedWatch tool shows that the probability of no rate cut in November stands at 11.3%, while the probability of a 25 basis point rate cut is 88.7%. Just a week ago, the possibility of "no rate cut in November" was not on the market's radar, with expectations at that time suggesting a 35.2% chance of a 50 basis point rate cut and a 64.8% chance of a 25 basis point rate cut in November.

However, the unexpectedly strong non-farm employment report quickly extinguished expectations for a significant rate cut. In September, the U.S. non-farm payrolls increased by 254,000, far exceeding the market's estimate of around 150,000; the unemployment rate decreased by 0.1 percentage points month-on-month to 4.1%. Additionally, the Department of Labor revised the employment figures for the previous two months, with a significant upward revision of 55,000 for July's non-farm payrolls to 144,000. This implies that the labor market at the end of summer was not as weak as previously thought by the Federal Reserve and economists.

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The Federal Reserve made a substantial rate cut of 50 basis points at its September policy meeting, and the accompanying "dot plot" of the Federal Reserve's interest rate path indicated that another 50 basis points would be cut this year, with 25 basis points each in November and December. Analysts believe that the Federal Reserve's "big stride" into the rate-cutting cycle was largely due to a compensatory mindset. The July non-farm employment data released at the beginning of August shocked the market and even triggered the Sam Rule, which signals an economic recession. Federal Reserve Chairman Jerome Powell later stated that if he had seen this report before the policy meeting at the end of July, a rate cut would have been implemented at that time.

However, these developments have now become evidence for some analysts to ridicule the Federal Reserve for "lacking strategic vision." David Roche, founder of Quantum Strategy, told CNBC that the strong September non-farm data not only suggests that the Federal Reserve has no reason to continue with significant rate cuts but also makes people realize that the previous 50 basis point rate cut was a "hasty, foolish, populist, and panic" action.

Bank of America released a research report on Monday stating that the unexpected employment report reminded Wall Street that the path to future rate cuts may be fraught with difficulties, and the upcoming September inflation data needs to be closely monitored in the short term.

On Thursday evening, the U.S. will announce the September Consumer Price Index (CPI). Bank of America expects the data to be slightly firm but not yet a cause for concern. According to its forecast, the September CPI will rise by 0.1% month-on-month, narrowing the increase by 0.1 percentage points from the previous month, and the core CPI, excluding food and energy prices, will rise by 0.3% month-on-month, remaining unchanged from the previous month. Bank of America stated that if the inflation data meets expectations, the Federal Reserve may cut rates by 25 basis points in November, but if the data is "surprisingly strong," then a rate cut next month will become less certain.

Federal Reserve Governor Adriana Cisneros said in a speech in Germany on Tuesday that if inflation continues to decline, she is in favor of further rate cuts to gradually move towards a more neutral policy stance. However, if the upcoming data does not convince people that inflation is moving towards the Federal Reserve's 2% target, the pace of rate cuts may need to be slowed, but any decision on rate cuts will depend on "a variety of sources" of economic data.

On the same day, Boston Fed President Susan Collins said that as inflation tends to soften, the Federal Reserve is "very likely" to cut rates further, and future actions will be data-driven. She also believes that the labor market is in a "good, balanced" state, with core inflation moderating, and she is more confident that inflation will continue to decline.

"Looking ahead, maintaining the current favorable economic conditions requires adjusting the monetary policy stance to avoid unnecessary restrictions on demand," Collins said at a community banker conference in Boston. Prudent, data-based policy normalization will be appropriate when achieving the dual goals of price stability and full employment.