How many basis points will the US Congress lower interest rates on September 19, 2025?

Analysis of the Federal Reserve's September Rate Cut Expectations: The Market Bets on a 25 Basis Point Move as the Mainstream
The current market expectation for the Federal Reserve's interest rate cut in September is highly concentrated at 25 basis points. According to the CME FedWatch Tool, as of September 16, the probability of the Federal Reserve cutting rates by 25 basis points this week (September 19) is as high as 95.9%, while the probability of a 50 basis point cut is only 4.1%. This expectation aligns with previous institutional forecasts, such as Morgan Stanley's report in August, which indicated that the Federal Reserve would initiate a rate cut in September, starting with a 25 basis point reduction.

Core influencing factors of policy decision-making
Inflation pressures restrict the space for significant interest rate cuts
Phillip Swagel, the director of the Congressional Budget Office (CBO), pointed out that the tariff policies of the Trump administration have increased inflation. According to the inflation indicator preferred by the Federal Reserve, the inflation rate is expected to rise to 3.1% in 2025, significantly higher than the previous forecast of 2.2%. This risk of inflation rebound has become a key constraint for the Federal Reserve in cautiously lowering interest rates, making the possibility of a substantial 50 basis point cut extremely low. Although the U.S. economy has weakened since January (the CBO forecasts economic growth of 1.4% in 2025, down from the previous 1.9%), which may exert downward pressure on inflation, the high inflation levels in the short term still limit the extent of policy easing.

Trump exerts pressure and plays games with the market
President Trump has recently put public pressure on the Federal Reserve multiple times, demanding a "significant interest rate cut" and calling on Fed Chairman Powell on social media to "cut rates more than expected." However, the market has reacted little to this, with the probability of a 50 basis point rate cut remaining in the single digits. Analysts believe that Trump's pressure is more of a political posture, and the Federal Reserve, as an independent institution, is more likely to adopt a gradual easing based on economic data to balance the weakening labor market and inflation risks.

Subsequent policy paths and market impact
Predictions for the pace of interest rate cuts within the year
CME data shows that the market expects a cumulative interest rate cut of 50 basis points in October (i.e., consecutive cuts of 25 basis points in September and October) with a probability of 73.8%, while the probability of a cumulative cut of 75 basis points is only 3.1%. Morgan Stanley previously predicted that after a rate cut in September, the Federal Reserve would cut rates again in December and reduce rates by 25 basis points every quarter in 2026, which is generally consistent with the market's expectation of two rate cuts within the year. Goldman Sachs indicated that the September meeting statement may mention a softening labor market but will not explicitly suggest a rate cut in October, and the policy guidance may maintain flexibility.

Asset market linkage response
The expectation of interest rate cuts has driven the prices of safe-haven assets higher, with spot gold breaking through $3680/ounce this week, setting a new historical high, while the US dollar index fell by 0.26% to 97.300. The market generally believes that if the Federal Reserve cuts rates by 25 basis points as scheduled and does not release stronger easing signals, gold may face profit-taking pressure in the short term, but will still be supported by the decline in real interest rates in the medium to long term; the US stock market may continue to fluctuate, and it is necessary to pay attention to whether corporate earnings can absorb the expectations of interest rate cuts.

Uncertainty factors
The Supreme Court's ruling on the legality of Trump's tariffs poses a potential risk. If the ruling finds the tariffs illegal, the Treasury may be forced to refund $750 billion to $1 trillion in tariffs already collected, which will affect the CBO's forecast of the "$4 trillion reduction in the deficit over ten years due to tariffs" target, and exacerbate uncertainty in economic policy. However, the CBO believes that such uncertainty will gradually dissipate and completely disappear by the end of 2027, with no long-term impact on the recovery of investments.

In summary, the Federal Reserve is highly likely to announce a 25 basis point rate cut on September 19, with a policy tone leaning towards "moderate easing"; there is no realistic basis for a 50 basis point cut. Going forward, it is important to focus on the statement from the meeting regarding inflation and employment, as well as whether there are signals indicating a continued rate cut in October, as this will determine the market trends for the remainder of the year.

The above content is collected and generated by AI for reference only.