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Is the Fed set to announce a rate cut on Wednesday, September 17, the second day of its Federal Open Market Committee's periodic review? 

Globally, markets are pricing in a cut in the federal funds rate -- the main American interest rate -- to the tune of 25 basis points (bps) to 4-4.25 per cent from the current 4.25-4.5 per cent, with weakening employment, moderating inflation and persistent uncertainties having roots in the Trump 2.0 administration's tariffs, according to foreign media reports. 

Here's a quick take on the key factors that may help the Fed decide on a rate cut in the current meeting:

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This outcome of the FOMC's fifth scheduled review of the year will be tracked closely by investors globally to gauge possible cues and scope for interest rates in other major economies, including India. The US central bank's FOMC -- its rate-deciding panel headed by the Fed Chair -- meets eight times a year for scheduled reviews, and convenes additional meetings for financial emergencies like the pandemic. 

According to the Fed's June 2025 "dot-plot", the central bank has projected at least one reduction in the key lending rate this year, with the possibility of a second in Q4 (October-December). The dot plot -- as it is widely known -- is a graphic representation published by the Fed every quarter. This projection sums up FOMC member's rate revision expectations into a graph. 

Precisely, the plot provides an overview of Fed policymakers' near-future rate expectations. 

The clamour for rate cut has emerged as an underlying concern for investors on Wall Street over the past few months with many financial experts cricising Trump 2.0's often confusing tariff policies. Some economists have even highlighted teh back-and-forth in policy direction as more concerning than the Trump government's "reciprocal tariffs", as it has led to a complex mesh of retaliatory trade action by some of America's major trade partners, and so on. 

In the run-up to the September FOMC review, the last rate cut in the world's largest economy was in December. 

More economists are also leaning towards a rate cut this time in light of the Fed's long-term mandate to maximise employment while maintaining price stability. 

The decision will be announced at 11:30 pm India time, followed by Powell's media briefing 30 minutes later. 

At 6:50 pm in India, Dow futures were up over 100 points (0.2 per cent), suggesting a positive start to the day on Wall Street.

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