Overview

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18 de sept. de 2025It's a foregone conclusion that the Federal Reserve will launch a new monetary easing cycle on Wednesday by announcing a cut to the federal funds rate (FFR). But a weighty 18 de sept. de 2025Ahead of today’s decision, of the 113 economists surveyed by Bloomberg, only 9 had expected a 50bp cut. All but one of the remainder expected the FOMC to ease rates by just 21 de mar. de 2025According to the CME FedWatch Tool, there’s currently a 27.7% chance for a no-rate hike. On the contrary, there’s a 72.3% possibility for a 25 BPS incline. Source: CME 17 de sept. de 2025That expectation, according to the CME’s FedWatch tool, is set for a 50% chance of a 25 basis point (bps) cut for this September meeting and a 50% chance of a 50bps cut 18 de sept. de 2025Expect higher-than-usual volatility around the Fed decision, with the potential for Powell to moderate whatever the decision is in his press conference. USD/JPY may see the 13 de sept. de 2025The Federal Reserve is nearly as likely to deliver an outsized interest-rate cut next week as a more-usual-sized reduction, trading in rate-futures contracts suggested on Friday 19 de sept. de 2025The update to the dot-plot likely reveals the FOMC members' initial stance going into the meeting; ten members signaled a rate of 4.5 or below by year end, requiring a 50 17 de sept. de 2025Everything lower will force a recession much more likely. Second step needs to be another 50 bps too. A half-point rate cut could send a very negative signal, indicating the Fed's 20 de sept. de 2025In its much-awaited first rate cut of the post-pandemic economic cycle, the FOMC cut the Fed Funds target rate by 50 bps to a range of 4.75%–5.00%. Prior to Wednesday

FOMC Meeting: 50bps Drop or 25bps Hike - What to Expect?

Anticipation is high as the financial world awaits the Federal Open Market Committee (FOMC) meeting. The key question on everyone's mind: Will it be a bold 50bps rate cut or a more cautious 25bps hike? This decision will significantly impact markets and the overall economy.

While some sources from around 18 de sept. de 2025 speculated that the Federal Reserve would launch a new monetary easing cycle with a cut to the federal funds rate (FFR), the current outlook is more nuanced.

The Case for a 25bps Hike:

As of 21 de mar. de 2025, the CME FedWatch Tool indicates a significant probability of a rate hike. Currently, there's a 72.3% possibility for a 25 BPS incline. Only a 27.7% chance is assigned to a no-rate hike scenario. This suggests that the market leans toward a more hawkish stance from the FOMC.

The Case for a 50bps Cut (and Why It's Less Likely):

Previously, 17 de sept. de 2025, expectations, per the CME’s FedWatch tool, suggested a 50% chance of a 25 basis point (bps) cut and a 50% chance of a 50bps cut for that September meeting. However, that outlook has shifted. While some, even as late as 20 de sept. de 2025, recall past FOMC actions cutting the Fed Funds target rate by 50 bps, the current economic environment presents a different picture.

Ahead of a past decision, around 18 de sept. de 2025, of the economists surveyed by Bloomberg, only a small minority expected a 50bp cut. A half-point rate cut could send a very negative signal, indicating the Fed's concerns about the economy. Indeed, 17 de sept. de 2025 warnings suggested that anything lower than expected could force a recession. A further 50 bps cut might then be necessary.

While 13 de sept. de 2025 reports indicated that the Federal Reserve was nearly as likely to deliver an outsized interest-rate cut next week as a more-usual-sized reduction, that has since become less likely.

Navigating Market Volatility:

Expect higher-than-usual volatility around the Fed decision, as noted on 18 de sept. de 2025. The potential for Powell to moderate whatever the decision is in his press conference is high. Keep a close eye on currency pairs like USD/JPY as they often react strongly to Fed announcements.

The Dot Plot and Future Expectations:

The update to the dot-plot, mentioned from around 19 de sept. de 2025, offers crucial insights. Even with signals of potential future rate adjustments, the immediate decision remains the focal point. Ten members signaled a rate potentially requiring a 50 point adjustment.

Conclusion:

While a 50bps cut cannot be entirely ruled out, the current data and expert opinions suggest a higher probability of a 25bps hike. However, the FOMC decision is data-dependent, and any surprises could trigger significant market reactions. Stay informed and be prepared for potential volatility.

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