Here’s why most economists—according to a recent Reuters poll—expect the U.S. Federal Reserve to cut interest rates in September, followed by at least one more cut before the end of 2025:

Key Drivers Behind the Expectations
1. Softening Labor Market

Recent data revisions show weaker-than-expected hiring, suggesting the labour market is losing steam. Given the Fed’s dual mandate (price stability and full employment), this cooling job picture increases the likelihood of easing measures.
Reuters
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2. Inflation Pressures & Tariffs

Inflation remains elevated—driven in part by Trump’s tariffs—though some expect these pressures to be temporary or to ebb by year-end. The Fed is caught between sustained inflation risks and emerging downside risks to employment.

3. Market Expectations & Price Signals

Financial markets are pricing in a high probability of rate cuts—around 85% to 87.5% chance for a September cut—with expectations of another cut by December.
Politico

4. Official Fed Commentary

Fed Governor Christopher Waller has explicitly endorsed a 25 bp cut at the September 16–17 meeting and signalled that further easing over the next 3–6 months may follow—depending on incoming data.
Reuters

Chair Jerome Powell, speaking at the Jackson Hole symposium, acknowledged rising risks to employment and the possibility that the “balance of risks” may now justify a policy shift. Though he emphasized caution, markets still reacted enthusiastically to his remarks, betting on September and December cuts.


5. Consensus from the Reuters Poll

61% of economists polled expect a 25 basis-point cut in September, with many also forecasting another cut later in the year.
Reuters

This aligns with prior surveys (e.g., June poll), where around 55% of economists saw cuts beginning in Q3, most likely September.
Reuters

Summary Table: Why Economists Are Expecting Rate Cuts
Factor Influence on Rate Cut Outlook
Cooling labour market Raises concern over employment stability
Persistent inflation vs. easing risks Creates policy tightrope; trade & tariffs also cloud outlook
Market signals Futures show strong pricing in for rate cuts
Fed officials’ remarks Waller supportive; Powell cautious but open
Poll consensus Majority expect two cuts—September and one more this year
Bottom Line

Most economists expect a September rate cut (approx. 25 bp) and at least one more cut in 2025, driven by:

A weakening labour market,

Inflation still above target amid tariff pressures,

Market pricing signaling rate cuts,

And dovish signals from Fed officials.