The Fed is expected to lower the target range for the federal funds rate by 25 basis points to 3.75%–4.00% on Wednesday.
However, Generali Investments predicts that this decision could be made through a “three-way split” vote.
According to the institution, one member could vote for a larger 50 basis point cut, while others could vote to keep interest rates steady. This could create an “almost unprecedented divide of opinion,” said Paul Zanghieri, Senior Economist at Generali Investments.
Zanghieri also stated that the Fed is expected to cut interest rates again in December and then deliver a final rate cut in the first quarter of 2026. Fed Chair Jerome Powell is expected to describe the cut as a “risk management measure” at his press conference, but will not provide policy guidance for the December meeting.
Analysts at research firm Wrightson suggested that the Fed may be ready to end its quantitative tightening process this week.
According to the agency, recent trends in the overnight lending market suggest that financing conditions are tightening and banks’ reserve levels are approaching equilibrium levels. Wrightson’s team stated that the Fed’s action this week would be a cautious move aimed at preventing excessive market pressure.
*This is not investment advice.