Wall Street's September Jitters: Anticipating Rate Cuts Amid Economic Uncertainty

September 2025 | Wall Street is widely anticipating a Federal Reserve rate cut at its September 17 meeting. This expectation stems from evidence of a cooling labor market—August saw only 22,000 new jobs and downward revisions for previous months. Fed-fund futures suggest a 100% chance of a rate cut, with a small possibility (11%) of a larger 50 basis point cut. However, the upcoming consumer price index (CPI) and producer price index (PPI) readings for August are critical in shaping expectations for future monetary policy. Core inflation, especially within the service sector, remains a key focus. Federal Reserve officials, including Chicago Fed President Austan Goolsbee, are cautious, emphasizing that inflation trends still weigh heavily on decisions. While investors are confident in at least one cut, uncertainties around inflation—especially from tariff impacts—remain. Though signs suggest tariffs may drive prices higher, economists see only moderate passthrough effects so far. Despite investors pricing in up to 200 basis points in rate cuts through 2026, experts warn this may be overly optimistic. Still, modest rate-cut signals could support the stock market amid ongoing economic uncertainty, with the S&P 500 and Nasdaq recently achieving gains.

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