US Fed to signal more cuts ahead at September FOMC meeting: economists
Published: 13:01 12 Sep 2025 EDT
Deutsche Bank economists expect the US Federal Reserve to deliver a 25-basis point (bps) rate cut at next week’s FOMC meeting and signal that more reductions are likely to follow over the remaining meetings this year, they wrote in a note to clients on Friday.
“We now expect the Fed to cut by 75bps total this year, 25bps at each of the remaining meetings," the economists stated, citing recent data showing further weakness in the labor market and somewhat more modest inflationary pressures than anticipated.
They noted that lower rates are likely to be motivated by risk management considerations.
Deutsche Bank’s economic team said this path would leave the fed funds rate at 3.5% to 3.75% by year end, consistent with their view of neutral.
“While we currently do not have additional rate cuts in our forecast for next year, given that our inflation and labor market forecasts are inconsistent with rates below neutral, risks are skewed towards more reductions in 2026,” they added.
The economists also wrote that September’s rate decision is unlikely to be unanimous amongst its Board of Governors and, depending on the outcome, could be the first meeting where three Governors dissent since 1988.
