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AUGUST 2025 #6

Fed Watch: Are Rate Cuts Finally Coming?

If you've been following the Fed meetings, you know they  haven't made any rate changes since September 2024, but they’ve left the door open to a potential cut at September’s meeting. Still, any move will be data-driven, weighing risks in the labor market against ongoing inflation pressures.

What’s Driving the Uncertainty?

• Labor Market’s “Curious Balance” – Powell noted both job demand and supply are slowing, raising concerns about a potential downturn.
  
  

• Tariff-Driven Inflation – Tariffs are fueling inflation, though many Fed officials believe the impact may be temporary.
  
  

• FOMC Projections (June 2025) – Rates remain at 4.25–4.50%, but policymakers signaled two cuts are likely before year-end.
  
  

Snapshot: Where Things Stand

Factor Outlook

September Rate Cut Markets price a 70-90% chance; Powell signaled openness.

Economic Risks Labor market slowing; inflation remains elevated.

Fed Projections Two cuts expected in 2025, though timing is uncertain. 

Data Dependence Decisions will hinge on upcoming jobs and CPI reports.

Final Take

All signs point toward rate cuts before the end of 2025, with the first possible in September. For now, the Fed is moving cautiously, letting new data on employment and inflation guide their next steps.