US Fed to cut rates in September and once more this year, say most economists
reuters.com -- Friday, August 15, 2025, 7:16:06 AM Eastern Daylight Time
Categories: Economic Policy & Jobs, Public Opinion & Polling, Presidential Campaigns
BENGALURU, Aug 15 (Reuters) - A Federal Reserve interest rate cut in September, the first this year, followed perhaps by another before year-end remains the base forecast for most economists polled by Reuters amid rising concerns about the health of the world's biggest economy.
U.S. inflation is rising again, with more upward pressure expected from President Donald Trump's tariffs, and there have been big downward revisions to hiring figures over recent months that suggest the job market is weakening.
Trump has berated Fed Chair Jerome Powell over his reluctance to cut rates. And at the July meeting there was clear divergence from the steady rates position among a minority of Federal Open Market Committee members.
Alongside simmering doubts over the Fed's independence from political interference and declining reliability of economic data, it has become more difficult for economists to make predictions with great conviction.
August is not typically a month for big forecast changes either. Many are waiting for the next round of inflation and jobs data, as well as a speech from Powell, his last at the Fed's annual Jackson Hole conference held this month as his term as Fed chief ends in May.
Economists are broadly sticking to a more cautious outlook than interest rate futures traders, whose pricing suggests a near-certainty of a September cut and strong likelihood of another, and the possibility of a third by year-end.
A 61% majority, 67 of 110, predicted the Fed would lower its benchmark interest rate by 25 basis points to 4.00%-4.25% on September 17 for the first time this year, up from 53% in July's survey. One forecast a 50 basis point move.
The remaining 42 said the Fed would hold rates again.
"We think that market participants are excessively confident in a September cut, as they are misinterpreting both the FOMC's assessment of labor market conditions and its reaction function," wrote economists at Barclays in a note.
"In our view, the main question is not so much about whether the Fed needs to ease policy to lean against job declines, but whether the situation warrants cuts on the grounds that the balance of risks has shifted away from inflation and toward the full employment mandate."
Over 60% of respondents, 68 of 110, predicted there would be either one or two rate cuts this year, broadly unchanged from last month. But there was no consensus on where the federal funds rate would be at end-2025.
A near-80% majority of economists who answered an extra question, fewer than the usual sample, said the inflation impact from tariffs would be temporary.
A 68% majority also expected no serious erosion of the Fed's independence during the remainder of Powell's term.
Inflation forecasts were broadly unchanged from last month, averaging above the Fed's 2% target through at least 2027.
The unemployment rate was expected to be around the current 4.2% or slightly above over the next few years, suggesting economists have not yet fully responded to the recent sharp downward revisions to hiring and may do so in the next poll if August jobs data are also weak.
"We come down on the side of thinking the Fed would prefer to retain optionality," said Michael Gapen, chief U.S. economist at Morgan Stanley.
"This would leave room for a soft August employment report to open the door for cuts, or a reasonably strong employment report plus another round of firming in CPI inflation to keep the Fed on hold."
(Other stories from the Reuters global economic poll)
Reporting by Indradip Ghosh. Polling by Anant Chandak, Aman Kumar Soni, Renusri K and Sarupya Ganguly. Editing by Ross Finley and Mark Potter
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Indradip Ghosh
Thomson Reuters
Reports on the outlook for major economies and central bank policies, and financial markets including, foreign exchange, bonds, housing and stocks. Indradip previously worked at Zacks Research as an equity research analyst for three years. Indradip has a post-graduate degree in economics and an interest in debating various topics related to economics, financial markets and politics.
Sign Our PetitionThe recent forecasts from economists regarding potential cuts in interest rates by the Federal Reserve are reflective of deeper systemic issues that have been exacerbated by ongoing political turmoil and economic policy decisions, particularly during the Trump administration. As the U.S. grapples with rising inflation and a wavering job market, the implications of these rate adjustments extend far beyond mere numbers; they resonate with the lived experiences of working-class Americans who are increasingly vulnerable in a fluctuating economy. Historically, interest rate policy has been a tool wielded by those in power to influence economic conditions, yet it often overlooks the realities faced by ordinary citizens who bear the brunt of such financial decisions.
The anticipated rate cuts come at a time when many Americans are still struggling with the ramifications of inflation that disproportionately affects low- and middle-income families. The rising costs of essential goods, driven in part by tariffs implemented under Trump’s administration, highlight a pattern of economic policy that prioritizes short-term gains for corporations over the long-term stability of the workforce. The connection between inflation and the burdens placed on everyday consumers cannot be overstated; as prices rise, so too does the pressure on families to make ends meet. The historical precedent of economic policy failing to consider social equity suggests that the effects of these rate cuts may be minimal for those who truly need support.
Moreover, the Federal Reserve's independence has long been a contentious issue, particularly in the Trump era, where political interference became a tool for short-term victories at the expense of sound policy. The Fed’s ability to operate free from political influence is crucial for maintaining a balanced economic environment. However, the skepticism surrounding Powell's leadership and the Fed's decision-making process raises questions about how effectively the institution can fulfill its dual mandate of promoting maximum employment and stable prices. Economists’ concerns that the current political climate could undermine this independence speak to a larger narrative of accountability and transparency in governance, which is vital for building public trust.
As we examine the forecasts and potential cuts, it is important to contextualize these discussions within the broader landscape of social justice and economic inequality. The disparity in wealth and opportunity in America is a direct consequence of policy decisions that favor the affluent while neglecting the basic needs of the working class. Rate cuts may provide temporary relief to some sectors; however, without addressing the underlying issues of wage stagnation and job security, they will ultimately fail to uplift those who are most affected by economic instability. The historical struggle for economic justice reminds us that sustainable change requires systemic reform, not just reactive measures.
In conclusion, the anticipated cuts in interest rates, while ostensibly a response to economic challenges, must be viewed through a lens that emphasizes the need for policies aimed at equity and justice. As the Federal Reserve navigates these turbulent waters, it is essential for advocates of social change to remind policymakers that the measures they employ must serve the broader goal of creating an economy that works for everyone, not just the privileged few. Engaging in conversations about the implications of economic policy on everyday lives not only sheds light on the complexities of such issues but also empowers individuals to challenge the status quo and demand a more equitable future.
The recent forecasts from economists regarding potential interest rate cuts by the Federal Reserve signal troubling implications for both the economy and the broader socio-political landscape. As we navigate an increasingly complex economic environment marked by rising inflation and weakening job markets, it is crucial to analyze the underlying factors contributing to this volatility. Economic policies, particularly those shaped by the current administration, have far-reaching consequences that extend beyond mere numbers on a spreadsheet. In this context, it's essential to engage in critical discussions around the interplay between monetary policy and the everyday realities faced by American workers.
Historically, the Federal Reserve's independence has served as a cornerstone of U.S. economic policy, designed to insulate monetary policy from political pressures. However, recent developments underscore a concerning trend of political interference, particularly from figures like former President Trump, who has vocally criticized Fed Chair Jerome Powell for not acting in alignment with his administration's agenda. This erosion of independence could lead to decisions driven more by political expediency than by sound economic principles. It is essential to recognize that the Fed's primary mandate is not simply to react to market pressures, but to ensure sustainable economic growth and full employment, objectives that are often at odds with short-term political goals.
As economists express concerns about the rising inflation spurred by tariffs, we must consider the broader implications of such policies. Tariffs can provide a temporary boost to domestic industries, but they often come at the expense of consumers, who face higher prices for goods. Furthermore, the uncertainty surrounding trade policies can dampen business investment and hiring, exacerbating job market weaknesses. As inflation rises, it is critical to foster a more equitable economic environment that prioritizes the needs of working families over corporate interests. Advocates for fair trade practices and labor rights must engage with their communities to raise awareness about the detrimental effects of punitive trade policies and push for reforms that prioritize workers' well-being.
In light of the current economic climate, Americans can take several proactive steps to influence policy decisions and advocate for their interests. Grassroots movements that focus on raising awareness around economic issues, including inflation and job security, can yield substantial results. Engaging in local activism, supporting candidates who prioritize economic justice, and demanding transparency in monetary policy can create a groundswell of support for changes that benefit ordinary citizens. Additionally, fostering solidarity among labor unions and advocacy organizations can amplify collective voices, ensuring that the needs of workers are prioritized in economic discussions.
Education plays a vital role in equipping individuals with the knowledge necessary to navigate these complex issues. As we discuss the implications of Federal Reserve policies and economic conditions, it is imperative to foster spaces for dialogue and learning. Community forums, workshops, and online platforms can serve as invaluable resources for sharing information about the economy and its impact on everyday lives. By educating ourselves and others about the intricacies of monetary policy, inflation, and labor rights, we empower individuals to engage critically with political narratives and advocate for a more just economy.
In conclusion, the potential interest rate cuts by the Federal Reserve are not just a technical economic matter; they represent a critical juncture in the ongoing struggle for economic equity in the United States. As we face rising inflation and a precarious job market, it is essential to remain vigilant and active in shaping policy discussions. By advocating for the needs of working families, promoting fair trade practices, and fostering educational initiatives, we can collectively work towards a more equitable economic future. Through sustained engagement and activism, we can hold decision-makers accountable and ensure that economic policies reflect the values of fairness and justice, rather than mere political expediency.
In light of the Federal Reserve's anticipated interest rate cuts and the economic challenges described in the article, there are several personal actions we can take to advocate for economic policies that prioritize working people and communities. Here’s a detailed list of ideas and actions you can consider:
### Personal Actions to Advocate for Economic Justice
1. **Educate Yourself and Others** - Understand the implications of interest rate cuts and how they affect inflation, employment, and everyday citizens. - Share information through social media, community groups, or local organizations to raise awareness about economic policies and their impacts.
2. **Engage in Local Politics** - Attend town hall meetings or city council sessions to discuss economic concerns directly with local representatives. Bring up issues related to job security, inflation, and community economic health.
3. **Sign and Share Petitions** - Support petitions that call for economic reforms aimed at ensuring fair wages, affordable housing, and job security. - Example: Visit platforms like Change.org or MoveOn.org to find or create petitions focused on revitalizing the economy in ways that benefit the majority. - Share these petitions within your networks to amplify support.
4. **Contact Your Elected Officials** - Write to your congressional representatives and urge them to prioritize economic policies that protect workers and address inflation comprehensively. - **Example Contacts:** - **Senator Elizabeth Warren** - Email: https://www.warren.senate.gov/contact - Mailing Address: 2400 JFK Federal Building, 15 New Sudbury Street, Boston, MA 02203 - **Representative Alexandria Ocasio-Cortez** - Email: https://ocasio-cortez.house.gov/contact - Mailing Address: 1231 W 181st St, New York, NY 10033
5. **Advocate for a Fair Minimum Wage** - Write letters to local newspapers advocating for a living wage in your community. - Example message: “As the cost of living continues to rise, it is imperative that our local leaders commit to raising the minimum wage to ensure that all workers can support themselves and their families.”
6. **Support Local Economic Initiatives** - Get involved with local cooperatives, community-supported agriculture (CSA), or small businesses that prioritize fair labor practices. - Consider investing your time or resources in local initiatives focused on economic sustainability.
7. **Join or Support Labor Unions** - If you are not already a member, consider joining a union or supporting union efforts in your workplace. Unions play a critical role in advocating for workers' rights, fair wages, and job security. - Contact local unions for opportunities to get involved, such as the United Farm Workers or the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO).
8. **Participate in Economic Forums or Workshops** - Attend community forums or workshops focused on economic issues. Many communities hold discussions on topics like equitable economic growth and the impacts of federal policies. - These gatherings are great opportunities to share your ideas and collaborate on solutions.
9. **Utilize Social Media for Advocacy** - Use platforms like Twitter, Facebook, or Instagram to voice your opinions on economic issues, tag your representatives, and encourage discussions among peers. - Example post: “With the Federal Reserve potentially cutting interest rates, we must push for policies that protect jobs and fight inflation for working families! #FairEconomy #LivingWage”
10. **Create a Community Action Group** - Form or join a local group focused on economic justice. Organize events, discussions, and actions that highlight the need for equitable economic policies in your area. - Collaborate on initiatives that engage with local businesses and government officials.
By taking these actions, you can contribute to a broader movement calling for economic policies that serve the needs of everyday people, rather than prioritizing corporate interests and financial markets. Your voice and efforts can help foster a more equitable economic landscape.