Analysts anticipate that the Federal Reserve will lower its key federal funds rate this week, marking the first reduction since December 2024.
Based on futures data tracked by CME Group’s FedWatch tool, there is a 93% probability of a quarter-point cut, bringing the benchmark range down to 4%–4.25%. A deeper, half-point move is seen as less likely, but not ruled out.
At the press briefing, Fed Chair Powell is expected to revisit themes from his recent Jackson Hole address, underscoring what he described as a clear softening in labour market trends, according to an EY report.
EY’s preview of the meeting says he is also likely to underline that the balance of risks has changed, with inflation pressures still a concern but growing weaknesses in employment now taking on greater significance, the report added.
So far in 2025, at every meeting, the Federal Reserve has opted to leave the benchmark federal funds rate unchanged, holding it within the 4.25% to 4.5% range.
