Fed Expected to Reduce Interest Rate This Month
(MENAFN) The US Federal Reserve is widely anticipated to reduce interest rates this September after holding steady for nine months, while other global central banks appear set to maintain a more cautious approach.
The Federal Reserve’s forthcoming monetary policy move is set to shape decisions among central banks globally, as markets keenly seek direction amid persistent tariff uncertainties. Inflationary pressures have intensified in tandem with US President Donald Trump’s protectionist trade actions, raising alarms. At its most recent Federal Open Market Committee meeting, the Fed recognized that inflation was somewhat high.
Notably, Fed Governors Michelle Bowman and Christopher Waller supported a 25-basis-point rate cut at the last session. Fed Chair Jerome Powell further hinted at easing during his address at the Jackson Hole Economic Policy Symposium in Wyoming on August 22.
Market analysts report that several Fed officials anticipate a 25-basis-point reduction in September, a move that could ease the mounting political pressure from the Trump administration. Money market projections currently assign an 87% probability to a rate cut at the Fed’s September 17 meeting, potentially lowering the policy rate to a 4.00-4.25% range.
Adding to the picture, the Fed will release its Beige Book report on Wednesday, providing further insight into its evaluation of the US economy — a key focal point for investors.
The Federal Reserve is not alone in drawing investor attention. The Bank of Japan (BoJ) kept its policy rate at 0.5% in July and is expected to hold this level through September. However, it may hike rates by about 25 basis points before year-end. The BoJ also revised its inflation outlook upward, increasing forecasts for fiscal 2025 from 2.2% to 2.7%, for fiscal 2026 from 1.7% to 1.8%, and for fiscal 2029 from 1.9% to 2.0%.
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