Catenaa, Thursday, September 11, 2025-Traders expect the Federal Reserve to resume cutting short-term interest rates next week, with the central bank likely to deliver three rate reductions this year as employment growth shows signs of slowing.
Preliminary revisions from the Labor Department indicate that the US economy created roughly 911,000 fewer jobs in the year through March than previously estimated, suggesting monthly payroll gains were significantly weaker than prior reports indicated.
BMO economist Sal Guatieri said the data strengthens the case for an immediate quarter-point rate cut at the Fed’s September 16–17 meeting and signals further reductions at the October and December meetings.
Traders are largely pricing in the September and October cuts, with the probability of a December reduction slightly lower than prior forecasts, while bets on additional cuts in early 2026 have also moderated.
Fed Chair Jerome Powell acknowledged rising downside risks to the labor market last month but stressed caution, as inflation remains above the Fed’s 2% target and tariff-related risks persist.
Investors await two upcoming inflation reports later this week, expected to show continued upward price pressures, which could influence the central bank’s approach to further easing.
The move reflects the Fed’s balancing act between supporting a softening labor market and managing inflation, with policymakers under scrutiny to avoid over-easing while economic conditions remain uncertain.
