A majority of economists believe the U.S. Federal Reserve will lower its main interest rate in September 2025, and most expect it to cut rates again later in the year. This forecast comes from a recent Reuters poll of 107 economists.

What’s Expected in September

  • Nearly all (105 out of 107) economists surveyed predict a 25 basis point cut in interest rates on September 17, bringing the Fed rate down to a range of 4.00% to 4.25%.

  • Only two of them expect a bigger cut (50 basis points).

Why They Think So

  • Recent data shows job growth stalling in August.

  • There was also a sharp downward revision in past job data (for a 12-month period through March).

  • These signs suggest labor demand is weakening more than previously understood.

What Comes After September

  • Most economists believe there will be at least one more rate cut before the end of 2025.

  • Market expectations have shifted: earlier they were expecting two cuts, now some are looking for as many as three.

Risks and Concerns

  • Inflation is still a concern, especially with things like tariffs pushing prices up.

  • There’s also worry that unemployment could rise if the Fed cuts too aggressively.

Where Inflation and Unemployment Fit In

  • Inflation is expected to stay above the Fed’s target (which is about 2%) at least until 2027.

  • Unemployment is expected to remain around 4.3% for a while.

Closing Thoughts

Economists believe the Fed is moving toward easing its policy, mainly because of signs the job market is cooling. While inflation remains a worry, the balance is tilting toward giving more help to workers and the economy. People are watching closely for how large these future cuts will be, and whether the Fed will be cautious, or more bold, in doing so.

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