The Federal Reserve’s Big September Decision
This Wednesday, September 17, the Federal Reserve wraps up its two-day policy meeting, and it could be one of the most market-moving decisions of 2025. Inflation is still running hotter than the Fed would like, the labor market is showing cracks, and political pressure to “go big” on rate cuts is loud.
Markets expect the Fed to trim rates by 25 basis points, its first move in months. But the bigger story will be how many cuts it signals for the rest of 2025, what it projects for inflation in 2026, and how Chair Jerome Powell frames the risks to growth vs. prices.
Photo courtesy of Getty Images
What the Economy Is Signaling
Jobs Are Cooling: Payroll growth has been missing forecasts, unemployment claims are the highest since 2021, and job openings have slipped. That makes the Fed more likely to ease.
Inflation Still Elevated: Core inflation (excluding food and energy) remains above the Fed’s 2% target. Tariffs and import costs are creating a “floor” under prices, keeping policymakers cautious.
Political & Market Backdrop: President Trump has publicly urged a larger cut, and disputes over Fed appointments are adding noise. But Powell will stress that decisions are data-driven, not politically driven.
What to Watch in Wednesday’s Decision
1. Size of the Cut
The base case is -25 bps, which markets have already priced in. A surprise -50 bps cut would spark a strong rally across stocks, bonds, and real estate.
2. Dot Plot & SEP
This is one of the Fed’s quarterly meetings that includes a Summary of Economic Projections, its forecasts for inflation, GDP, unemployment, and the all-important “dot plot” showing where officials expect rates to be in 2025–2026.
Investors will be looking for how many more cuts the Fed expects this year, and whether the 2026 median rate moves lower (a dovish signal) or stays near current levels (a more cautious stance).
3. Statement Language
Look for subtle changes. Whether inflation is described as having “eased” or still “elevated,” and whether the Fed highlights labor market “softening.” These word choices move markets.
4. Powell’s Press Conference
Jerome Powell takes questions 30 minutes after the decision. He’s likely to emphasize a “data-dependent” approach, keeping options open for further cuts if jobs weaken or inflation falls faster than expected.
What It Means for Investors
Real Estate & Housing: Even a small rate cut can reduce borrowing costs, which helps deals pencil out and supports housing demand. Expect mortgage rates to drift lower if the Fed stays dovish.
Commercial Real Estate: Lower rates relieve pressure on cap rates and improve refinancing math for owners holding maturing debt in 2025–26.
Stock & Bond Markets: If the Fed sticks to a modest cut and signals patience. Markets may take it as a “soft landing” signal. Good news for risk assets.
“The size of this cut matters less than the path. The dot plot will tell us whether we should expect one cut or several. For investors, the cost of capital sets everything—debt service, cap rates, property values. Even a quarter-point can move a deal from red to green.”
This Wednesday’s Fed meeting is about more than rates, it’s about clarity. If Powell can show that the Fed has a steady hand and a clear plan, markets will reward that with confidence.
Want to dive deep into the Fed. I go over the history of the FED and key points on it that you were never taught in history class: READ IT HERE
