FX.co ★ Fed Expected to Cut Interest Rates

The Federal Reserve is anticipated to lower the federal funds rate by 25 basis points at its September 2025 meeting, adjusting the rate to the 4.00%–4.25% range. This would mark the first decrease in borrowing costs since the prior December. This decision is influenced by the cooling of the labor market, with payroll growth remaining below 100,000 for four consecutive months, alongside a plateau in disinflation. Inflation, conversely, surged to 2.9% in August as the comprehensive effects of tariffs are still unfolding. While the likelihood of a more substantial 50 basis-point cut is limited, President Trump has publicly advocated for a "significant" rate cut. Additionally, the Federal Reserve will unveil revised economic forecasts and an updated dot plot. Investors are projecting at least two more quarter-point rate reductions by the end of the year. This meeting occurs in the wake of a U.S. appeals court dismissing President Trump’s efforts to remove Lisa Cook from the Fed Board of Governors. Concurrently, the Senate confirmed Stephen Miran to join the Board on Monday evening.