Fed May Cut Rates Twice This Year, Says Investment Expert

An investment strategist tells CNBC that the Federal Reserve is likely to reduce interest rates twice before the end of 2025. In an August 18 interview, Sam Stovall—Chief Investment Strategist at CFRA Research—highlighted key expectations ahead. He noted that investors are closely watching Chair Jerome Powell’s remarks at the Jackson Hole Economic Policy Symposium, where he may signal the Fed’s continued vigilance toward economic data, especially as employment slowly softens and inflation remains stubbornly high.

Why the Fed Could Act Twice

1. Strategic Timing of Meetings
   With three policy meetings scheduled before year’s end, experts see potential action in September and December as data evolves.

2. Softening Labor Signals
   Early indicators suggest the job market may be weakening—something Stovall emphasized could prompt responsive rate adjustments.

3. Lingering Inflation Concerns
   Even if the Fed signals cuts, they may be cautious due to inflation pressures—especially as tariffs continue to influence consumer prices.

4. Market Alignment
   Markets appear closely aligned with this outlook. After signals from Fed officials hinting at potential easing, futures markets have heavily priced in rate cuts by year-end.

What This Means for You

• For Borrowers: Lower rates may reduce borrowing costs later this year if you’re considering refinancing or a new mortgage.

• For Investors: Rate cuts often boost equity markets. This could mean increased opportunities in growth and dividend stocks.

• For Markets: Headlines on rate cuts may sway bond yields, equity sentiment, and currency valuations. Be prepared for market shifts.

Conclusion

As we look ahead to September—and potentially December—the Federal Reserve seems poised to respond to shifting economic dynamics. If hiring slows further and inflation cools, Stovall’s bold prediction of two rate cuts may come to fruition. What seems clear is that markets, businesses, and individuals should keep a close eye on economic readings and Powell’s tone. Being ready—and informed—will be key as we move through the final months of 2025.