The FED has been pausing the interest rate cuts it started with 50 basis points in September of last year, since January 2025.
The Fed, which left interest rates unchanged until 2025, citing tariff tensions fueled by US President Donald Trump, is expected to begin cutting interest rates again in September.
At this point, with only a few days left until the FED announces its September interest rate decision, it is almost certain that it will cut interest rates.
At this point, a 25 basis point cut by the FED is priced in at 92.7%, while a 50 basis point cut is priced in at 7.3%.
As expectations for the Fed rise, Reuters conducted a survey with the participation of 107 economists.
According to a Reuters poll, 105 of 107 economists predicted the Fed would cut interest rates by 25 basis points on September 17 as labor market weakness outweighed inflation risks.
Only two economists said they expected a 50 basis point cut.
These economists also stated that they expect another interest rate cut in the next quarter and estimate that the total number of cuts this year will reach three.
“The Fed now has four months of evidence of a slowdown in labor demand, and that slowdown looks more persistent… In short, ignore where inflation is today and ease policy to support the labor market. At this point, we think a 25 basis point rate cut in September is more likely,” said Michael Gapen, Morgan Stanley’s chief U.S. economist.
The survey found that employment growth stalled in August and a sharp decline in employment data for the 12 months through March led many economists to revise their forecasts to include larger interest rate cuts than previously thought.
*This is not investment advice.