Fed Expected to Cut Rates by 25bps at FOMC September Meeting

September 17, 2025. The U.S. Federal Reserve’s FOMC has convened for its September meeting, with markets assigning a 95% probability of a 25 basis point cut in the federal funds rate, according to CME FedWatch data. If confirmed, this would lower the benchmark range from 4.25%–4.50% to 4.00%–4.25%, marking the Fed’s first cut of 2025 after months of holding steady.

The anticipated move follows a string of weak labor data, including just 22,000 jobs added in August and downward revisions to prior payrolls. Fed Chair Jerome Powell will provide remarks and unveil an updated Summary of Economic Projections (SEP) at the conclusion of the FOMC meeting tomorrow.

Why the September FOMC Meeting Matters

The September FOMC meeting comes at a time of heightened economic uncertainty. Inflation remains elevated at 2.9% YoY, but signs of a cooling labor market have shifted the Fed’s priorities toward supporting growth. Lowering rates is expected to ease borrowing costs for households and businesses, impacting credit cards, mortgages, and corporate loans.

The decision reflects the Fed’s dual mandate: supporting employment while maintaining price stability. By cutting rates modestly, policymakers signal concern over growth without undermining credibility in the fight against inflation.

Market Reactions Ahead of the Decision

Financial markets have already priced in a cut, with equities hovering at record levels. The 10-year Treasury yield has dipped to 4.07%, reflecting expectations of further easing. Rate-sensitive sectors like tech and real estate stand to benefit, while savers may see lower yields on high-interest accounts.

Crypto markets also watch the September FOMC meeting closely. Lower borrowing costs often encourage risk appetite, creating tailwinds for digital assets alongside equities.

What Comes After the FOMC Meeting

Markets currently price in two to three additional 25 bps cuts before year-end, which would lower the fed funds rate to around 3.75%–4.00%. J.P. Morgan projects further reductions into 2026, targeting 3.25%–3.50%.

A small but notable 10–14% chance of a surprise 50 bps cut remains, which could spark volatility. Powell’s tone at the post-meeting press conference will be critical in shaping expectations for the next FOMC meetings scheduled in October and December.