Fed Convenes Two-Day Meeting Amid Calls for Rate Cut

WASHINGTON, Sept. 16, 2025 - Federal Reserve officials began their two-day Federal Open Market Committee meeting today in Washington to weigh the first interest-rate reduction since December 2024 as labor‐market strains intensify and inflation remains above target.

The gathering comes at a pivotal moment for the Fed’s dual mandate of price stability and full employment, with markets virtually certain of a 25-basis-point cut on Wednesday and investors eagerly awaiting forward guidance on future easing.

Meeting Set Against Economic Tug-of-War

Nearly nine months after holding rates steady, Fed governors face mounting evidence of a cooling labor market-weekly jobless claims recently hit their highest level in almost four years-while consumer prices still exceed the central bank’s 2 percent goal.

• CME FedWatch Tool pegs the odds of a quarter-point cut at over 90 percent, with only a slim chance of a half-point reduction.
• Treasury yields and the dollar drifted lower ahead of the meeting as markets firmed up bets on imminent easing.

Political Pressure and Board Dynamics

President Donald Trump has publicly pressed for deeper and faster rate cuts, intensifying scrutiny of Chair Jerome Powell’s commitment to Fed independence.

• Stephen Miran, Trump’s newly confirmed nominee, and Governor Lisa Cook-who won a court battle to retain her seat-will both vote, injecting uncertainty into the deliberations.
• Internal dissent is possible: some policymakers may favor a larger initial cut, while others remain wary of fueling inflation.

What’s Next in Fed Forecasts

Aside from deciding on a rate adjustment, the Fed will release updated economic projections, offering insights into members’ views on growth, unemployment and inflation through year-end.

• June’s median outlook called for two cuts in 2025, but opinions ranged from none to multiple reductions.
• Markets will scrutinize commentary on the pace of future easing and any changes to the Fed’s dot plot.

Market and Global Ripples

A quarter-point rate cut is expected to lower the federal funds rate to 4.00 - 4.25 percent, influencing borrowing costs globally and shaping asset prices. Equity markets are bracing for volatility as traders digest Fed signals on Wednesday afternoon.

• The dollar index slid to a two-month low against major peers, reflecting growing bets on U.S. monetary easing.
• Treasury yields dipped as investors repositioned ahead of the decision, eyeing potential relief for fiscal borrowing costs.

Officials will reconvene Wednesday afternoon to announce their decision and hold a press conference at 2 p.m. ET.