Three Rate Cuts Just Talk?
Barclays analysts predict the Fed's latest "dot plot" will project three rate cuts by the end of 2025. The projections will be released alongside the interest rate decision on Wednesday, US time.
For context, the June dot plot suggested the federal funds rate would be around 3.9% by the end of 2025 (implying two cuts this year), and the Committee at that time appeared divided on the pace of easing. This September update will show whether the median projection shifts more dovish.
According to the latest data, August inflation rose as expected amid ongoing tariff burden shifting—a factor that could potentially restrain the pace of inflation decline in the short term. However, the market still believes there is room for easing.
Ahead of the decision, market participants were almost unanimous in expecting a 25 bps cut; the primary focus was on Powell's tone and the release of the dot plot for forward guidance. Global risk sentiment was also supported by a weakening dollar and a rally in Asian equities.
For investors, the market's baseline scenario is a "dovish cut" without major surprises, with the interest rate map confirming a gradual easing path. A major change could emerge if Powell emphasizes the risk of stronger inflation or hints at a different pace of cuts than expected.
Key points:
Barclays projects three cuts by the end of 2025.
June dot plot: 3.9% at the end of 2025; Committee split.
August inflation rose as expected; tariffs contributed to price pressures.
Market pricing 25 bps cut; Powell's tone and dot plot key to market direction. (ayu)
Source: Newsmaker.id
