{"id":10824,"date":"2025-08-26T13:02:04","date_gmt":"2025-08-26T11:02:04","guid":{"rendered":"https:\/\/oxfordwisefinance.com\/blog\/?p=10824"},"modified":"2025-08-26T13:02:17","modified_gmt":"2025-08-26T11:02:17","slug":"fed-rate-cut-possible-in-september-signals-powell","status":"publish","type":"post","link":"https:\/\/oxfordwisefinance.com\/blog\/fed-rate-cut-possible-in-september-signals-powell\/","title":{"rendered":"Fed Rate Cut Possible in September, Signals Powell"},"content":{"rendered":"<\/p>\n<div>\n<p>Throughout the year, <b><a href=\"https:\/\/oxfordwisefinance.com\/blog\/8-19-25-market-update-opening-bell-insights\/\">market analysts<\/a><\/b> have been diligently monitoring indicators that could signal when the <b>Federal Reserve<\/b> is poised to lower <b>interest rates<\/b> again. This quest for clarity has been critical for <b>investors<\/b> and <b><a href=\"https:\/\/oxfordwisefinance.com\/blog\/wall-streets-current-optimism-about-the-market\/\">economists<\/a><\/b> alike, as rate changes can significantly impact the economy.<\/p>\n<p>During a much-anticipated speech delivered on Friday at <b>Jackson Hole, Wyoming<\/b>, <b>Fed Chair Jerome Powell<\/b> provided his most definitive hint to date regarding a potential rate cut. Powell stated, \u201cWith policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,\u201d indicating a readiness for change.<\/p>\n<p>Investors interpreted Powell\u2019s complex language, often referred to as \u201c<b>Fedspeak<\/b>,\u201d as a strong indication that the U.S. central banking system is likely to reduce rates at the upcoming <b>Federal Open Market Committee<\/b> meeting in September. Following his remarks, U.S. stock prices surged dramatically, with the <b><a href=\"https:\/\/oxfordwisefinance.com\/blog\/octobers-worst-performing-dow-jones-stocks-buy-now\/\">Dow Jones Industrial Average<\/a><\/b> reaching a new all-time high.<\/p>\n<p>Additionally, both the <b>S&amp;P 500<\/b> and the tech-heavy <b><a href=\"https:\/\/oxfordwisefinance.com\/blog\/top-3-highest-paying-nasdaq-dividend-stocks-to-buy\/\">Nasdaq<\/a><\/b> saw significant gains on Friday, although enthusiasm began to wane early the following Monday as market realities set in.<\/p>\n<h2>Will the Federal Reserve Lower Rates in September? Insights from Experts<\/h2>\n<p>The Fed chair is known for making ambiguous statements and has historically refrained from committing to future rate cuts. However, in his recent speech, Powell laid the groundwork for a likely cut. He underscored the Fed\u2019s dual mandate, which aims to ensure maximum employment and stable prices for American households. He pointed out the stable yet weakening labor market as a basis for potential policy adjustments, noting that while job growth has slowed significantly compared to last year, the unemployment rate remains low at a historically significant level of 4.2%.<\/p>\n<p>\u201cPowell essentially delivered September&#8217;s rate cut, eliminating much of the speculation surrounding next month\u2019s meeting,\u201d commented <b>Seema Shah<\/b>, the chief global strategist at <b>Principal Asset Management<\/b>, in insights shared with Money. This perspective reflects a growing consensus among analysts regarding the Fed&#8217;s imminent actions.<\/p>\n<p>Despite Powell&#8217;s acknowledgment of \u201cclearly visible\u201d indicators suggesting that <b><a href=\"https:\/\/oxfordwisefinance.com\/blog\/why-president-elect-donald-trump-may-skip-2025-social-security-taxes\/\">President Donald Trump<\/a><\/b>&#8216;s tariffs are driving consumer prices higher, experts remain uncertain about when these impacts will manifest for consumers. The <b>Budget Lab<\/b> at <b><a href=\"https:\/\/oxfordwisefinance.com\/blog\/trumps-new-tariff-announcement-impact-on-your-finances\/\">Yale University<\/a><\/b> projects that these tariff-induced price increases could elevate inflation by 1.8 percentage points in the short term. Nonetheless, the Fed regards these inflationary pressures as \u201crelatively short-lived.\u201d<\/p>\n<p>\u201cA reasonable base case is that the effects will be relatively short-lived\u2014a one-time shift in the price level,\u201d Powell remarked. \u201cHowever, it\u2019s essential to note that a one-time adjustment does not imply an immediate effect; it will take time for tariff increases to permeate through supply chains.\u201d<\/p>\n<p>In his Friday address, Powell \u201cemphasized the moderating employment market rather than the still-elevated inflation,\u201d noted <b>Jack McIntyre<\/b>, a portfolio manager at <b>Brandywine Global<\/b>, in commentary sent via email. \u201cThe takeaway is that the Fed is gearing up to cut policy rates at the September FOMC meeting.\u201d<\/p>\n<p>Before Powell&#8217;s remarks, approximately 70% of investors anticipated a rate cut in September, as indicated by the <b>CME Group&#8217;s FedWatch tool<\/b>. In the hours following his speech, that expectation surged to nearly 90%. However, as of Monday, investor confidence in a September rate cut slightly decreased to 84%.<\/p>\n<div class=\"ca-pcu-inline content-width has-ad-icon    money-embed-ca\" data-pcu-render-at-=\"2025-08-25T14:20:48Z\" id=\"ap43468-ww\">\n<div id=\"ap43468-ww-indicator\">\n<div id=\"ap43468-ww-indicator-wrapper\"><span id=\"ap43468-ww-text\">Ads by Money. We may be compensated if you click this ad.<\/span><span id=\"ap43468-ww-label\">Ad<\/span><span id=\"ap43468-ww-icon\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" alt=\"Ads by Money disclaimer\" height=\"16\" width=\"16\" src=\"https:\/\/i0.wp.com\/s3.money.com\/prd\/image\/image\/15240\/163e573e-202a-466a-b8b8-93da65db2b13.png?resize=16%2C16&#038;ssl=1\" \/><\/span><\/div>\n<\/div>\n<\/div>\n<h2>What Size Rate Cut Can We Expect in September?<\/h2>\n<p>Historically, <b>rate changes<\/b> have indicated that fluctuations of 0.25 percentage points are standard practice. Adjustments to <b>interest rates<\/b> larger than this typically occur as a reaction to alarming economic data releases. For instance, when inflation surged significantly during the pandemic in 2022, the Fed implemented a series of rate hikes ranging from 0.50 to 0.75 percentage points.<\/p>\n<p>Currently, baseline interest rates have been maintained within the 4.25-4.5% range, with the Fed last reducing rates back in December 2024. Most investors now anticipate a 0.25 percentage point cut to end the current stasis. According to FedWatch, there is currently a 0% expectation of a larger 0.5 percentage point reduction among investors.<\/p>\n<p>For months, President Trump has been vocally urging the Fed chair to lower interest rates significantly. The president has intensified his long-standing conflict with Powell and the Fed, recently calling for Powell&#8217;s resignation and threatening to dismiss a central bank governor. In theory, the Fed is designed to function as an apolitical entity focused on maintaining economic stability, yet Trump has openly expressed his desire for much lower rates and appears willing to undermine the Fed&#8217;s independence.<\/p>\n<p>\u201cThere is little economic justification for an emergency-sized 50 basis point cut,\u201d Shah remarked. \u201cIf the Fed chooses to make such a drastic move, the markets may interpret it as evidence of political influence rather than a decision grounded in data.\u201d<\/p>\n<p>Nevertheless, the next FOMC meeting is only about three weeks away, and numerous developments could unfold in that time. All attention will be directed toward the August jobs report, set to be released on September 5, which may provide crucial insights into the anticipated size of the rate cut.<\/p>\n<div class=\"ca-pcu-inline content-width has-ad-icon    money-embed-ca\" data-pcu-render-at-=\"2025-08-26T10:53:28Z\" id=\"ap85722-ww\">\n<div id=\"ap85722-ww-indicator\">\n<div id=\"ap85722-ww-indicator-wrapper\"><span id=\"ap85722-ww-text\">Ads by Money. We may be compensated if you click this ad.<\/span><span id=\"ap85722-ww-label\">Ad<\/span><span id=\"ap85722-ww-icon\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" alt=\"Ads by Money disclaimer\" height=\"16\" width=\"16\" src=\"https:\/\/i0.wp.com\/s3.money.com\/prd\/image\/image\/15240\/163e573e-202a-466a-b8b8-93da65db2b13.png?resize=16%2C16&#038;ssl=1\" \/><\/span><\/div>\n<\/div>\n<\/div>\n<h2>Explore Additional Insights and Resources from Money:<\/h2>\n<p>Are You Waiting for 0% Interest Rates? Don&#8217;t Hold Your Breath Too Long<\/p>\n<p>Are U.S. Stocks Overvalued? A Disagreement Among Everyday Investors and Experts<\/p>\n<p>Should You Consider Investing Your 401(k) in Private Equity?<\/p>\n<\/p>\n<\/div>\n\n<p><a href=\"https:\/\/money.com\/fed-rate-cut-september-experts-predict\/?xid=moneyrss\" rel=\"nofollow\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Throughout the year, market analysts have been diligently monitoring indicators that could [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":10825,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","pagelayer_contact_templates":[],"_pagelayer_content":"","iawp_total_views":3,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[443,142],"tags":[50],"class_list":["post-10824","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economic-policy","category-finance-business","tag-news","col-md-12"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Fed Rate Cut Possible in September, Signals Powell - Blog - Oxford Wise Finance<\/title>\n<meta name=\"description\" content=\"Fed Chair Powell hints at a September rate cut. 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