The Federal Reserve is widely expected to cut rates in the upcoming meetings.
Markets are watching closely as these moves could ripple through everything from loans to savings and even shake up the crypto markets.
Economists Forecast Two More Fed Rate Cuts This Year
According to a Reuters poll of economists, the Federal Reserve will reduce its key interest rate twice before the end of the year, with a 25-basis-point cut expected next week and another in December.
Economists are nearly unanimous in predicting another Fed rate cut, with 115 out of 117 expecting a quarter-point drop to 3.75%-4.00% on October 29. Only two expected a 25 bps cut in October and a 50 bps cut in December. However, the majority for another rate cut drops to about 70%.
Just a month ago, economists were expecting only one more rate cut this year. However, expectations are now shifting as the Federal Reserve signals it may ease rates further and inject more liquidity in the markets.
The Fed cut interest rates by 25 bps in its last meeting. Fed Officials including Chair Jerome Powell, have signaled that their main focus remains the job market. The government shutdown has delayed key employment and inflation data, making it harder to get a clear picture of the economy.
Fed Officials Divided On Rate Cuts
The Fed officials hold differing views as some worry rates are too high and may slow growth unnecessarily, while others are concerned that further cuts could worsen inflation.
Federal Governor Christopher Waller supports another 0.25% interest rate cut at the October meeting due to signs of a weakening labor market, although future moves will depend on upcoming data and how GDP growth aligns with hiring trends.
However, Fed Governor Stephen Miran argued for an even more aggressive rate-cut path. President Trump has also been urging Powell to cut rates aggressively.
Fed Rate Cut Nearly Certain?
The Fed is heading into its October 28-29 policy meeting with its view of the U.S. economy clouded. According to the CME FedWatch tool, the probability of a 25-basis-point rate cut at the next Fed meeting currently stands at 98.9%.
The CPI data was delayed and is expected to be released on October 24, just days before the Federal Reserve’s October 28–29 meeting.
A weaker-than-expected reading could push the Fed toward rate cuts, sending a positive signal for risk assets, including crypto. If inflation turns out higher than expected, it could put pressure on risk assets and slow crypto’s rebound.
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