The probability of a 25 -basic reduction by the US Federal Reserve increased in September, but the final decision will depend on the coming economic data, according to a recent report from ICICIs Bank.
The report stated that there is now a 65 percent chance of a rate reduction in September and a 35 percent chance that the FED will maintain current rates. However, it emphasized that the final decision remains dependent on the flow of economic data. This is because two inflation reports and two labor market reports are planned for release before the next policy meeting.
“If inflation remains modest and the labor market starts to deteriorate, the FOMC will probably lower the rates in September with 25 BPS and 25bps in December,” the report noted. In a scenario in which inflation turns out to be stickier and the labor market remains balanced, the possibility of postponing the rate paralysis cannot be excluded. The bank added that it will adjust its projections accordingly on the basis of how the data evolves.
In its last policy meeting on Thursday (IST), the FOMC decided to keep the benchmarkrentetal rates unchanged at 4.25 percent to 4.5 percent. This marks the fifth consecutive meeting in which the FED has opted for a status quo. Interesting is that the decision to maintain rates was not unanimous. Two of the eleven members entitled to vote, the Federal Reserve greurs Christopher Waller and Michelle Bowman, did not agree, which indicates a preference to lower the rates during the July policy meeting.
These different views were largely expected and reflect the growing divergence within the FOMC.
Despite the internal differences, the majority of the FOMC members supported the decision to maintain the current policy rate, which shows that a cautious approach continues to supervise the monetary attitude of the FED in the midst of evolving economic conditions.
Published on August 1, 2025
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