The Federal Reserve is widely expected to cut the federal funds rate by 25bps during its September 2025 meeting, bringing it to the 4.00%–4.25% range — the first reduction in borrowing costs since December. The move comes against the backdrop of a cooling labour market, with payroll growth holding below 100K for four consecutive months, while disinflation has stalled and inflation accelerated to 2.9% in August while the full impact of tariffs has yet to be felt.
Expectations for a larger 50bps cut remain limited, though President Trump has also publicly urged the Fed to deliver a “big cut.” The Fed will also release updated economic projections and a new dot plot, with markets anticipating at least two further quarter-point cuts before year-end. The meeting comes as a US appeals court rejected President Trump’s attempt to oust Lisa Cook from the Fed Board of Governors, while Stephen Miran was confirmed by the Senate on Monday evening to join the Board.
