Fed Expected to Signal September Rate Cut at Next Week’s Meeting

 

The Federal Reserve is poised to signal its plans for a rate cut in September, according to economists surveyed by Bloomberg News. Nearly three-quarters of respondents anticipate the US central bank will use the upcoming July 30-31 gathering to set the stage for a quarter-point reduction next month. 

However, there’s some debate about how policymakers will convey this move. While half of the economists expect both the policy statement and Fed Chair Jerome Powell’s press conference to signal the upcoming cut, others believe the Fed may use one method or the other. Regardless, all respondents agree that rates will remain unchanged at next week’s meeting.

In recent weeks, Fed officials have emphasized the goal of maximum employment and stable prices when deciding on policy. The median view among economists is for interest-rate cuts in September and December, slightly less aggressive than market expectations. While some investors even bet on an initial half-point cut, economists see that as unlikely. Such a move would likely occur only if labor market conditions, currently strong but less overheated, were to deteriorate.

Traders are also pricing in a 100% chance of a rate cut at the September meeting, with futures data suggesting that once the Fed starts cutting, it will continue to do so. The odds of a quarter-point reduction are high, and the central bank’s decision will be closely watched by investors and markets.

Stay tuned for further updates as the Fed’s monetary policy evolves in response to economic conditions!