Federal Reserve likely to reduce interest rates today?
US Federal Reserve Expected to Cut Key Interest Rate
The US Federal Reserve is set to make an interest rate decision today, with most market observers predicting a cut in the key rate. This move is largely expected to address the weakening labor market and stimulate economic growth.
President Donald Trump has been demanding interest rate cuts for months, and his influence on the Fed's board has increased with the addition of his confidant, Stephen Moore, who is suspected to vote in favor of cuts in future rate meetings.
In mid-September 2025, the Fed cut the key interest rate by 0.25 percentage points, reflecting both Trump's pressure and economic factors like a weakening labor market. However, Trump advocated for even larger cuts, but the Fed’s decision was more modest.
Stephen Moore, one of Trump's allies, temporarily joined the committee that decides on the key rate as part of the central bank council. Economist Dirk Schumacher of the promotional bank KfW and Berenberg economist Felix Schmidt also expect a reduction at the end of October. The International Monetary Fund (IMF) and the IMF's communications director, Julie Kozack, have expressed optimism about a rate cut, with Kozack stating the Fed could begin to cautiously lower the key rate range.
Economist Dirk Schumacher described a cut in interest rates as "a done deal." A lower key rate can be attractive to consumers and businesses looking to take out loans at better terms. However, it's important to note that a lower key rate could have side effects, but specific details are not provided in the text.
The number of jobs created in the 12 months to March 2025 was revised down by a total of 911,000, indicating a slower job growth than expected. This uncertainty affects the US labor market more rapidly than in Germany, where different standards for dismissal protection apply.
The vice chair, Lisa Cook, is fighting Trump's decision to dismiss her due to alleged irregularities in private real estate loans in a US appeals court. Trump suffered a defeat in the court, but the details are not provided in the text.
Companies are increasingly uncertain about their investment plans due to President Donald Trump's trade policies. More money in circulation due to a lower key rate can boost the economy and create jobs, but the extent of this impact is yet to be seen.
Stay tuned for the Federal Reserve's decision and its potential implications for the US economy.
