The Federal Reserve is likely to deliver its third interest rate cut of the year on Wednesday, a move widely understood to be insurance against the bottom fully falling out of the labor market.But to Sahm-a former Fed economist, recession-indicator architect, adn one of the central bank’s most closely watched outside interpreters-the more consequential question isn’t what the Fed does on Wednesday. It’s what additional cuts would mean.

“If the [Jerome] Powell Fed ends up doing a lot more cuts,” she told Fortune ahead of the decision, “then we probably don’t have a good economy. Be careful what you wish for.”

That framing cuts against the dominant mood on Wall Street, where rate cuts have recently been reflexively welcomed and futures markets are already pricing in a second round of easing in 2026. But Sahm thinks investors should only want more cuts if they’re prepared to cheer for a recession.

Powell’s last stretch, and the hardest one

Sahm expects the Fed’s cut today-almost universally anticipated in futures markets-to be paired with language that raises the bar for any move in January. With the core inflation rate still sticky at 2.8%, higher than the Fed’s preferred rate of 2%, and unemployment rising, the Fed is straddling both halves of its mandate.

“It is a tough one,” Sahm said. “Whatever they do could upset the other side.”

that tension is especially sharp becuase Fed Chair Jerome Powell is nearing the end of his term. He has three meetings left-January, March, and April-before the governance installs a successor, but President donald Trump will likely name a new chair before Christmas, according to Bessemer Trust’s chief investment officer, Mary Ellen Iskenderian.