Fed likely to deliver 25 basis point rate cut this week says market strategist

The US Federal Reserve is poised to deliver a 25 basis point (0.25%) rate cut this week, according to Matt Orton, Chief Market Strategist at Raymond James Investment. He dismissed speculation of a larger 50 basis point reduction as highly improbable under current economic conditions.According to the CME FedWatch Tool, markets overwhelmingly agree: there is a 95.9% probability that the Fed will lower rates to a range of 400–425 basis points at its September 17, 2025, meeting. Only a small 4.1% of investors expect a deeper cut to 375–400 basis points, while the current target range remains at 425–450 basis points.

Orton said while some recent data points—such as jobless claims and the New York Empire State manufacturing survey—have shown weakness, a more aggressive cut is not justified.

The continued strength in aggregate gross domestic product (GDP) growth, the robust health of corporate America, and inflation that remains sticky. “I think it would be very hard for Powell to get a consensus to move around 50 basis points,” Orton said.
He outlined a likely roadmap for monetary policy for the remainder of the year, expecting the initial 25 basis point cut this month to be followed by subsequent cuts in October and December. This would bring the total reduction to 75 basis points for the year. Orton believes this anticipated dovish trajectory from the Fed is a key factor supporting the current ‘risk-on’ sentiment prevailing in equity markets.

Also Read: September Fed rate cut uncertain, market ‘melt-up’ risks ahead: Ed Yardeni

For the entire interview, watch the accompanying video

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