Will the Feds cut rates again this year?

Based on the latest information, it’s quite likely that the Fed will cut rates at least a couple more times this year. Here’s a breakdown of the evidence, the Fed’s stance, and what could make cuts more or less likely:

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✅ Why More Cuts Are Likely

1. Recent Cut + Dot Plot Projections
   After cutting the fed funds rate by 25 basis points (bps), Fed officials projected two more quarter-point cuts for the remainder of 2025. (Reuters)
2. Economic Indicators Softening
   The labor market is weakening (job growth slowing, revisions showing far fewer jobs added), which shifts the Fed’s risk assessment toward downside risks for employment. (Reuters)
   Inflation remains above target but hasn’t been accelerating aggressively, giving the Fed some leeway. (Federal Reserve)
3. Market Expectations
   Futures markets and major banks are leaning toward more cuts. For example, JPMorgan sees a strong chance of another 25-bps cut, and some analysts believe there could be three or more cuts into early 2026. (Business Insider)

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⚠️ What Could Prevent or Limit Further Cuts

• If inflation (especially core PCE or CPI) remains stubbornly high or turns up again, that could make the Fed more cautious.
• Stronger-than-expected economic data (GDP growth, consumer spending, manufacturing) might reduce pressure to ease.
• Global risks or shocks (e.g. energy price spikes, geopolitics, trade policy issues) that push up inflation or disrupt supply chains.
• Concerns about losing credibility in inflation control could push the Fed to move slower.

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📊 What to Expect

Here’s a rough timeline and what markets are pricing in:

• Two more 25-bps cuts during the rest of 2025, likely at upcoming FOMC meetings. (Reuters)
• Possible one more cut in early 2026, depending on how inflation and labor market data evolve. (Federal Reserve)

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