$USDC Federal Reserve interest rate cut expectations focus on September, with two cuts possible this year

On June 19, 2025, the Federal Reserve maintained interest rates at 4.25%-4.5% for the fourth consecutive time in its latest policy meeting, but the dot plot indicates that two rate cuts (totaling 50 basis points) are still expected within the year. The market widely bets that the first rate cut will start in September, with data from the Chicago Mercantile Exchange showing a current probability of 65%, mainly because the Federal Reserve needs to assess the lagging effects of tariffs on inflation (May core PCE year-on-year at 2.8%) and the trend of a moderately weakening labor market.

Although Powell emphasized that they are “not in a hurry to act”, and seven officials believe there is no need for a rate cut in 2025, the downward revision of economic forecasts (GDP growth rate at 1.4%, unemployment rate at 4.5%) and increasing debt pressure strengthen the necessity for easing in the fourth quarter. Institutions like CICC expect the second rate cut to occur in December, with an annual total of 50 basis points. If inflation does not rebound significantly, September may become a turning point in policy.