According to 105 out of 107 economists, the US Federal Reserve is expected to cut its benchmark interest rate by 25 basis points to 4,00–4,25% at its next meeting on September 17. This would mark the first rate cut in 2025. The results were published in a Reuters survey conducted between September 8 and 11.
The main reason for the softer stance is a weakening labor market. August data showed slowing job growth, and a revision of annual data through March revealed an even sharper decline. This led to revised forecasts: now most analysts expect not just one, but two or more rate cuts before year-end.
Markets have already fully priced in the September cut and now expect three reductions instead of two, as previously assumed. At the same time, Fed Chair Jerome Powell and other policymakers continue to cautiously signal the possibility of easing, even as inflation risks remain.
Experts See Another Cut Next Quarter
According to the survey, 60% of analysts believe the rate will fall by 50 basis points by the end of 2025, while 37% expect a more aggressive 75 basis point cut. In August, only 22% of respondents held such a view.
Some analysts, including Michael Gapen of Morgan Stanley, argue that the Fed should focus primarily on the labor market.
“We have four months of data confirming a sustained decline in labor demand. What matters now is not the inflation level, but supporting employment,” he said.
Gapen expects a 25 basis point cut but does not rule out that some FOMC members could push for a 50 basis point reduction.
Personnel Changes at the Fed
Although most observers do not expect the Fed to lose independence under Powell, pressure remains. US President Donald Trump has repeatedly criticized Powell for being too cautious on rate cuts. His nominee for the Fed Board, Stephen Miran, is unlikely to take office before the next meeting, while Lisa Cook has retained her position after a court overturned the president’s attempt to remove her.
Inflation and Unemployment Remain Elevated
Reuters reports that inflation will stay above the 2% target until at least 2027. Unemployment is expected to remain near the current 4,3%. More than 60% of respondents believe that the main risk over the next year will be either a spike in inflation or a combination of rising inflation and faster unemployment growth.
Median forecasts point to an additional 75 basis point rate cut in 2026, bringing the rate to 3,00–3,25%.
“If the next chair adopts a more dovish stance, we will see further rate cuts in the second half of next year,” said Stephen Juneau, US economist at Bank of America.
Reuters also reported that on Thursday official data is expected to confirm accelerating consumer price growth.
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