Several cuts in sight? With inflation not making any major moves for months in the US, and a job market in difficulty, the US Federal Reserve (Fed) should, logically, announce a cut in its key rates at its meeting on 17 September. And financial experts polled by Reuters are also confident that there will be at least a second Fed rate cut by the end of this year, 2025.
A first cut in the Fed’s key rates is already priced in by the markets
According to a Reuters poll of 107 economists, it now appears clear that the U.S. Federal Reserve will cut interest rates by 25 basis points at the Federal Open Market Committee (FOMC) meeting next Wednesday, September 17.
The move would push the Fed’s interest rates to a range of 4 to 4.25 percent, up from 4.25 to 4.5 percent currently. These rates have been stuck at this level since their last decrease in December 2024.
This rate cut is already widely anticipated by the markets, which are now even expecting up to three cuts by the end of the year. Indeed, 64 of the 107 financial specialists (60%) surveyed by Reuters see at least a total of 50 basis points of decline by the end of 2025. And 37% of these experts predict a fall of 75 pts by the end of December.
A sluggish labor market that worries the Federal Reserve more than inflation
The U.S. labor market is showing signs of slowing. Employment growth stagnated in August. Worse, employment data has been revised downward for the period from March 2024 to March 2025, sparking controversy over potentially inflated employment figures to help Joe Biden (and then his successor, Kamala Harris) secure re-election.
In any case, these poor US employment figures have pushed many economists to revise their forecasts and anticipate a much more accommodative policy from the US central bank.
“The Fed now has four months of evidence of a slowdown in labor demand, which seems more persistent in nature… In short, we need to ignore where inflation stands today, and ease monetary policy to support the labor market. »
Michael Gapen, chief economist for the banking group Morgan Stanley.
President Donald Trump has repeatedly criticized Jerome Powell (the Fed chairman) for his reluctance and slowness to cut rates. But the central banker seems to have no choice now. Especially since the third governor, Stephen Miran, out of the seven members of the Federal Reserve’s Board of Governors, is now in favor of this cut in key rates. Jerome Powell has his back to the wall.