Fed Looks Locked In for Quarter-Point Cut: Decision Day Guide

The Federal Reserve is widely expected to lower interest rates by a quarter-point at its meeting that concludes Wednesday and leave the option open for additional moves despite demands by President Donald Trump for a “large” rate cut.

“We may get a dissent or two, but it seems like a 25-basis-point cut is pretty much locked in,” said Julia Coronado, president and founder of MacroPolicy Perspectives LLC in New York.

The Federal Open Market Committee will issue a policy statement at 2 p.m. after the two-day meeting concludes and Chairman Jerome Powell will brief reporters 30 minutes later.

The immediate outlook for policy has been made crystal clear thanks to a communications flub by New York Fed President John Williams in a July 18 speech.

Odds for a half-point cut rose after he recommended swift policy action if the economy weakens when rates are low, but fell back after the bank later clarified that he was not discussing upcoming policy moves. Trump weighed in on Williams’s remarks, saying a day later that he liked his first statement much more than his second.

The meeting still contains drama. It’s unclear how much opposition even a quarter-point cut will face within the FOMC, or what signal will emerge about the scope for further easing.

Underlying both questions are uncertainties about just how much the U.S. economy is likely to slow and how monetary policy should respond.

“For a lot of them, 25 will feel like a down payment,” said William English, a professor at Yale University and former senior Fed economist. “But I think they’ll be willing to wait to get more information and make a decision about how much easing to do over time.”