Fed Preview: A Rate Cut Is Baked In, Will Trump Get The 'Big Cut' He Wants

Rate Cut Expectations - The Federal Reserve is anticipated to announce a rate cut of at least 25 basis points during the upcoming Federal Open Market Committee meeting, marking the first cut since December 2024 [1][2] - There is a 96.1% probability of a 25-basis-point cut according to the CME FedWatch Tool, with a 3.9% chance of a 50-basis-point cut, which would be the largest since September 2024 [2] Economic Indicators - Current economic indicators show inflation, unemployment, and consumer spending are raising concerns, prompting the Fed's decision to consider rate cuts [3] - August retail sales increased by 0.6%, surpassing the consensus estimate of 0.3%, indicating healthy consumer spending [5][6] Market Reactions - Stock market indexes have reached all-time highs, raising questions about whether a 25-basis-point cut will suffice to maintain market momentum or if a larger cut is necessary [7][9] - Experts suggest that the market may experience volatility following the Fed's announcement, with potential sell-offs leading to a rally later in the year [7][8] Future Projections - Attention will be on the Dot Plot during the meeting, which will provide insights into Fed members' projections for growth, inflation, unemployment, and future rate cuts [4][8] - The upcoming FOMC meetings in October and December will be critical for determining additional rate moves or the first cut of 2025 [3]