Last week, the Fed voted 9-2 to hold the federal funds rate steady in a range between 4.25% and 4.50%. However, that likely won’t be the case come September.
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The Fed will hold its next Federal Open Market Committee (FOMC) meeting on September 16-17. While President Trump’s demands for a 3.0% rate cut will more than likely remain unfulfilled, a 25 bps rate cut will likely occur.
Expect a Rate Cut Next Month
According to CME’s FedWatch tool, the market is currently pricing in an 87.8% chance that the Fed will cut rates by 25 bps next month. The odds were at 63.1% a week ago and 64.0% a month ago. The odds of a 50 bps reduction are at 0.0%, down from 2.0% a week ago and 4.1% a month ago.
In 2024, the Fed slashed rates by 50 bps in September and by another 25 bps in November. Since then, the federal funds rate has remained unchanged.
Track the upcoming FOMC meeting and other key events with TipRanks’ Economic Calendar.
