The Federal Reserve is poised to repeat a costly mistake. Unless it cuts interest rates by half a percentage point at its meeting this week, the central bank risks allowing the economy to weaken further before policy catches up.

I have seen this play out before. In 2021 the Fed famously dismissed persistent inflation as “transitory,” keeping rates near zero while prices accelerated.

When officials finally admitted reality, they were forced into aggressive tightening that shocked markets and households alike.

History teaches us that waiting for perfect data can be disastrous. Now, with growth momentum ebbing and unemployment climbing, a quarter-point trim would again leave policy trailing the economic reality.

The latest figures speak for themselves. August payroll growth missed forecasts by a wide margin. The unemployment rate jumped to 4.3%, the highest in four years. Wage gains—long a pressure point for inflation—are easing.

These are not one-off blips; they’re signs of a cooling labor market. Yet futures markets tracked by the CME FedWatch tool show investors pricing a 90% chance of only a quarter-point cut. Caution may be the market consensus, but it is the wrong prescription.

A bolder move is needed. A half-point reduction would bolster consumer confidence and business investment just as trade frictions and rising input costs threaten to slow activity further.

Inflation, by contrast, is no longer the overriding threat. Core measures remain close to the Fed’s 2% target. That gives the central bank room to focus on the other half of its dual mandate: maximum employment. Protecting jobs and sustaining growth now requires decisive action.

The Fed has little room for hesitation. A timid quarter-point cut might soothe market expectations, but it would do little to change economic fundamentals. The central bank’s credibility depends not on following futures pricing, but on meeting its mandate. Policymakers should remember that markets often take their cue from the Fed, not the other way around.

Global markets are already positioning for easier policy. Treasury yields have dropped to three-month lows. The dollar has softened against risk-sensitive currencies. US equities are pushing toward record highs on bets that borrowing costs will come down.

A clear half-point cut would reinforce those trends, providing reassurance that the Fed intends to protect the expansion rather than simply shadow market sentiment.

Some will argue that a larger move risks reigniting inflation. I disagree. Inflation expectations remain well anchored, and the recent uptick in energy prices is driven largely by supply dynamics, not runaway demand. If anything, a forceful cut now could prevent a more severe slowdown that might later require even more dramatic measures. Pre-emptive easing is cheaper than emergency rescue.

My firm, deVere Group, expects the Fed will ultimately need to deliver at least 75 basis points of total easing by year-end if the labor market continues to weaken—likely a quarter-point this month followed by additional reductions. But there is no reason to drip-feed cuts when the data already justify stronger action. A half-point move now would provide immediate support and reduce the risk of a policy scramble later.

The stakes extend beyond the United States. American monetary policy sets the tone for global capital flows and investment decisions. Emerging markets, in particular, watch the Fed’s every move. A decisive cut would help stabilize currencies and encourage investment at a time when global trade is under strain.

Leadership sometimes requires defying expectations. In this case, leadership means recognizing that the greater danger lies in doing too little, not too much. The Federal Reserve’s mandate is clear: price stability and maximum employment. With inflation contained and the labor market cooling, that mandate calls for boldness.

History will not look kindly on another episode of complacency. A half-point cut is not reckless. It’s a strategic step to protect growth, safeguard jobs, and keep the world’s largest economy on track. The Fed should seize the moment.

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London-born Nigel Green is founder and CEO of deVere Group. Following in his father’s footsteps, he entered the financial services industry as a young adult. After working in the sector for 15 years in London, he subsequently spent several years operating within the international space, before launching deVere in 2002 with a single office in Hong Kong. Today, deVere is one of the world’s largest independent financial advisory organizations, doing business in 100 countries and with more than $12bn under advisement. It specializes global financial solutions to international, local mass affluent, and high-net-worth clients. In early 2017, it was announced that deVere would launch its own private bank. In addition, deVere also confirmed it has received its own investment banking license.