Finance — investing

Financial markets predict a possible double interest rate reduction in the year 2025

Major financial institutions are conceding to pressure. Reports indicate that after repeatedly advocating for sustained interest rates, leading figures on Wall Street now expect Jerome Powell's Federal Reserve to yield and initiate rate cuts as early as 2025, potentially not one but multiple,...

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2025 September 15 . 4:13 PM

1 min read

Financial markets anticipate two interest rate reductions in the year 2025

Financial markets predict a possible double interest rate reduction in the year 2025

In the economic landscape of 2025, the Federal Reserve (Fed) finds itself in a delicate position, grappling with pressures from both ends of its twin mandate: jobs and inflation.

The labor market, a key indicator of the Fed's employment mandate, is showing signs of cracking. Job growth, a cornerstone of a thriving economy, is wobbling hard, raising concerns about the potential threat to the Fed's goal of "maximum employment".

On the inflation front, there's some relief as prices are cooling. However, this easing inflation does not seem to be translating into robust job growth, creating a conundrum for the Fed.

Against this backdrop, Jerome H. Powell, the current Federal Reserve Chair, delivered a speech at Jackson Hole in August 2025, hinting at the possibility of interest rate changes. His words have set the stage for anticipation, with traders expecting a 25bps rate cut at the September FOMC meeting. Some even call for a 50bps cut.

The market's expectations suggest that the Fed may not be as in control as it may posture. The market has already decided that 2025 will be a risk-on year due to the expected rate cuts. For crypto traders, in particular, rate cuts are bullish as they increase liquidity and encourage investment in risk assets.

The rate cuts, if implemented, could help prevent the economy from slowing down and potentially stimulate job growth. However, the Fed must tread carefully, as lowering interest rates too much could lead to inflationary pressures.

As the Fed navigates these economic challenges, it will be interesting to see how it balances its twin mandate and responds to the market's expectations. The coming months promise to be a fascinating study in monetary policy and economic management.