T
he Fed is widely tipped to trim its policy rate by a quarter‑point at the September 17‑18, 2025 meeting, lowering the target range to 4.00‑4.25 %. While a larger cut is not ruled out, most indicators point to a cautious move as the economy balances slowing employment against stubborn inflation.
**Economic Snapshot – A “Soft Landing” with Hiccups**
The Fed’s two core metrics are employment and price growth. Recent BLS data show the CPI rose 2.9 % year‑over‑year to August 2025, driven by a 0.4 % jump in housing costs and a 0.5 % rise in food prices. Core inflation, excluding food and energy, sits at 3.1 %. Employment, however, is cooling: the unemployment rate climbed to 4.3 % in August, and job creation that month was only 22,000—far below expectations. Updated figures now indicate the economy added roughly 911,000 fewer jobs in 2024 and early 2025 than previously thought, underscoring a weaker labor market. Chair Jerome Powell has emphasized that policy decisions hinge on the latest data, signaling concern about job growth.
**Market Consensus on a Rate Cut**
Financial‑contract traders are almost certain a cut is coming. The CME FedWatch Tool shows a 100 % probability of a reduction this week, with about 92 % of that favoring a 25‑basis‑point cut. This sentiment surged after the disappointing August jobs report. A Reuters survey of 107 economists in early September found 105 predicted a 25‑basis‑point cut, many expecting at least one more cut before year‑end. Some forecast total cuts of 50 bps for 2025, others 75 bps. Major banks, including J.P. Morgan, also call for additional quarter‑point cuts after this meeting.
**Uncertainty and Balancing Act**
Analysts note the Fed must juggle a fragile job market against inflation still above its 2 % target. Social‑media chatter on X (formerly Twitter) suggests a rate cut could lift stocks and even cryptocurrencies, while political risks such as tariffs could introduce short‑term volatility.
| Forecasted Action | Likelihood |
|-------------------|------------|
| 25 bps cut this week | ~92 % |
| 50 bps cut this week | ~8 % |
| Additional cuts by year‑end | 50‑75 % total |
**From Rate Hikes to Cuts**
The Fed’s path to this point began in 2022‑23 with aggressive rate hikes to curb post‑pandemic inflation, moving from near‑zero to over 5 %. By early 2025, rates had stabilized at 4.25‑4.50 %. The upcoming cut would be the first in a while, signaling a shift toward supporting growth.
Historically, rate cuts are used to bolster employment and stave off recession. The 2019 cuts amid trade tensions, for example, helped lift equity markets. The Fed’s current strategy aims to achieve a “soft landing” – slowing the economy enough to tame inflation without triggering a downturn.
**Implications of a Quarter‑Point Cut**
- **Stocks**: Lower borrowing costs encourage corporate investment, often boosting equity markets, especially rate‑sensitive sectors like technology. The S&P 500 could continue its upward trend.
- **Mortgages**: Expectations of a cut already influence mortgage rates, which may dip below 6 %, making home buying more affordable and potentially stimulating the housing market.
- **Consumer & Business Spending**: Cheaper credit can reduce interest payments on loans and credit cards, spurring spending. The Fed hopes this will help control inflation while maintaining growth.
- **Risks**: If inflation rises—perhaps due to tariffs—the Fed may pause further cuts. Falling rates can make bonds less attractive while potentially lifting stocks.
**Preparing for the Fed’s Decision**
Whether or not a cut occurs, investors should position themselves now. Norada Real Estate offers cash‑flowing properties in stable markets, insulating portfolios from rate swings and volatility.
**Contact Norada**
Talk to a Norada investment counselor today (no obligation): (800) 611‑3060. Get started now.
**Recommended Reading**
- Fed Holds Interest Rates Steady for the Fifth Time in 2025
- Fed Projects Two Interest Rate Cuts Later in 2025
- Interest Rate Predictions for the Next 3 Years: 2025‑2027
- When is Fed’s Next Meeting on Interest Rate Decision in 2025?
- Interest Rate Predictions for the Next 10 Years: 2025‑2035
- Will the Bond Market Panic Keep Interest Rates High in 2025?
- Interest Rate Predictions for 2025 by JP Morgan Strategists
- Interest Rate Predictions for Next 2 Years: Expert Forecast
- Fed Holds Interest Rates But Lowers Economic Forecast for 2025
- Fed Indicates No Rush to Cut Interest Rates as Policy Shifts Loom in 2025
- Fed Funds Rate Forecast 2025‑2026: What to Expect?
- Interest Rate Predictions for 2025 and 2026 by NAR Chief
- Market Reactions: How Investors Should Prepare for Interest Rate Cut
- Impact of Interest Rate Cut on Mortgages, Car Loans, and Your Wallet
