Author: Chloe, ChainCatcher
The Federal Reserve (Fed) announced a 25 basis point rate cut at 2 AM on September 18, lowering the rate from 4.25%–4.50% to 4.00%–4.25%. This is the first rate cut by the Fed since December of last year, following five consecutive meetings this year where rates were held steady, and it is expected to initiate a new wave of rate cuts.
ChainCatcher has summarized the key points from the FOMC rate decision meeting, including Powell's remarks, the outlook for the U.S. economy, and feedback from major institutions and analysts.
Over 70% of Officials Prefer 1 to 3 Rate Cuts Within 2025
The Federal Open Market Committee voted 11 to 1 to lower the benchmark rate by 25 basis points. The only dissenting vote came from newly appointed Fed Governor Stephen Miran, who was appointed by Trump and officially sworn in after a swift Senate vote on the 16th. His opposition was based on the belief that the Fed should be more aggressive in cutting rates, advocating for a one-time cut of 50 basis points instead of the 25 basis points that were ultimately approved. His call for more aggressive easing was also reflected in the dot plot, where his forecast point was the only one significantly lower, indicating support for a cumulative rate cut of 150 basis points by the end of the year.
Forecasts suggest that the Fed will cut rates by another 75 basis points in 2025, highlighting the Fed's growing concerns about risk balance. Although the FOMC emphasized its commitment to a 2% inflation target, its tone has shifted more towards supporting growth and employment amid slowing economic momentum.
Data from the 19 officials participating in this FOMC meeting shows that a majority (76.3%) prefer 1 to 3 rate cuts within 2025, with about half (47.4%) supporting a 75 basis point cut, which would be three cuts. Another 31.6% support a 25 basis point cut, while a minority (5.3%) believe there will be no further cuts this year or even support a significant cut of 150 basis points. This indicates that, amid signs of economic slowdown and gradually easing inflation pressures, Fed officials generally lean towards maintaining an accommodative monetary policy and expect multiple rate cuts before the end of the year to stimulate economic growth.
Currently, the market believes that the central bank is preparing for a more accommodative policy path, with future directions leaning entirely dovish. However, Bitcoin's response has been slow, with price consolidation dominating the overall directional momentum.
Powell stated after the meeting that he continues to worry about inflationary pressures from tariffs, saying, "Our obligation is to ensure that one-time price increases do not evolve into a persistent inflation problem." He also mentioned, "Currently, labor demand has weakened, and the recent pace of job creation seems to be below the breakeven level needed to maintain the unemployment rate."
When asked about the possibility of further rate hikes before the end of the year, Powell took a cautious stance, stating that the Fed is currently in a "situation of adjusting at each meeting."
Institutional Observations
Seema Shah, Global Chief Strategist at Principal Asset Management: "The dot plot presents a variety of views, accurately reflecting the complex economic landscape caused by changes in labor supply, concerns about data accuracy, and uncertainties in government policy."
CME Group market traders: "The FedWatch tool calculates the market's implied probability of rate changes through the prices of 30-day federal funds futures contracts, estimating that there will be 2 to 3 more rate cuts next year."
Seema Shah from Principal Asset ManagementSM stated, "Next year's dot plot aggregates various perspectives, precisely reflecting the complexity of the current economic outlook, including changes in labor supply, data measurement issues, and the turbulence and uncertainty of government policy, all of which make this outlook more ambiguous."
Dovish/Hawkish Analyst Perspectives
Dovish Views
Michael Gapen (Chief U.S. Economist at Morgan Stanley): "The Fed cut rates by 25 basis points as expected and hinted at more cuts in the future. The Fed currently believes that the downside risks to employment have increased, providing justification for today's 25 basis point cut and the anticipated 75 basis points cut by the end of the year. Updated forecasts indicate that inflation may remain above 2.0% for a longer period, with PCE inflation revised from 2.4% to 2.6%. Overall, this is a dovish signal."
Blair Shwedo (Bank of America): "The Fed's decision was not surprising, and risk assets and U.S. Treasuries seem focused on the Fed's expectation of two more rate cuts this year. The decision from this meeting should generally be positive for risk assets, and we should see credit risk spreads remain at historically tight levels."
Brian Jacobsen (Chief Economist at Annex Wealth Management): "The Fed's decision aligns with our expectations, while Miran called for a larger cut (50 basis points) with his dissenting vote."
Hawkish Views
Michael Rosen (Chief Investment Officer at Angeles Investments): "In this decision, the Fed not only lowered rates but also raised its forecast for future inflation. This reflects the recent slowdown in job growth and a slight increase in the unemployment rate. The Fed hopes to stimulate economic activity and enhance job opportunities through rate cuts. Another factor is that inflation remains above the Fed's 2% target, and raising the inflation forecast indicates that the Fed believes price pressures may be more persistent than previously thought. This requires careful balancing between rate cuts and anti-inflation measures to prevent excessive easing from exacerbating price increases while avoiding tightening too quickly, which could further harm the job market."
Christopher Hodge (Chief U.S. Economist at Natixis): "Powell needs to explain why the dot plot shows more rate cuts in 2026 under conditions of lower unemployment and higher inflation. The dot plot is a difficult-to-interpret patchwork of predictions, and the dovish dot plot seems to conflict with the projected inflation/labor market dynamics."
Finally, several analysts in the market have noted significant divisions among Fed officials. Brij Khurana (Wellington Management) pointed out, "Only Miran dissented, pushing for a 50 basis point cut. The market had speculated that Waller and Bowman would also advocate for a 50 basis point cut at this meeting."
Although most officials in the latest dot plot predict room for two more rate cuts this year, bringing the benchmark rate to 3.5%–3.75%, the market is caught in a tug-of-war between observation and division; Mark Malek from Siebert Financial remains cautious about overly optimistic prospects, believing that premature enthusiasm could lead to more severe sell-offs in stocks and bonds, while Peter Cardillo from Spartan Capital views this decision as a dovish signal, expecting yields and the stock market to continue rising.
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