Federal Reserve Set to Cut Rates by 0.25% This Wednesday – First Move Since Trump’s Return to Office

• Why Is the Federal Reserve Cutting Rates Now?
• Global Central Banks in Lockstep (or Not)
• Wall Street’s AI Frenzy vs. Main Street Jitters
• FAQ: Your Burning Questions Answered

The Federal Reserve is poised to cut interest rates by 25 basis points this Wednesday, marking its first policy shift since Donald Trump resumed the presidency. This decision, heavily influenced by Trump’s push for cheaper borrowing, will Ripple across global markets, with the Bank of Canada and others also expected to act. Meanwhile, Wall Street remains bullish on AI-driven rallies, and central banks from Japan to the UK navigate inflation pressures. Below, we break down the key players, data, and market implications.

Why Is the Federal Reserve Cutting Rates Now?

The Fed’s anticipated 0.25% rate cut comes amid mounting pressure from the TRUMP administration to stimulate the economy, despite Chair Jerome Powell’s earlier inflation warnings. Recent job market data has tipped the scales, giving the Fed room to act. Analysts at BTCC note that this move could ease tensions between the White House and the central bank, though Trump’s tariff policies remain a wild card for long-term inflation. The cut would be the first since 2020, aligning with similar expected moves by Canada and Norway.

Global Central Banks in Lockstep (or Not)

Four G7 central banks are making calls this week, covering nearly 40% of the global economy. Here’s the breakdown:

• Bank of Canada: Likely cutting to 2.5% after weak Q2 growth and stagnant housing data.
• Bank of England: Holding at 4%, but a split vote looms as inflation dips to 3.8%.
• Bank of Japan: Standing pat despite inflation pressure; a hike may come later if the economy holds.

Emerging markets like Brazil and Indonesia are expected to stay on pause, while China’s flood of economic data this week (retail sales, industrial output) will test whether its stimulus efforts are gaining traction.

Wall Street’s AI Frenzy vs. Main Street Jitters

While retail investors show caution (only 28% bullish in AAII’s survey), institutional players are doubling down on AI optimism. Barclays’ Venu Krishna sums it up: “AI infrastructure demand is real, and software disruption fears are overblown.” Deutsche Bank just upgraded its 2025 S&P 500 target to 7,000, and Wells Fargo sees 6,650 by year-end. Even with shaky retail sales (August’s 0.3% rise missed expectations), the AI rally seems unstoppable—for now.

FAQ: Your Burning Questions Answered

What Time Is the Fed’s Rate Decision Announced?

The Federal Reserve will release its policy statement at 2:00 PM ET on Wednesday, September 17, 2025, followed by Chair Powell’s press conference.

How Will This Affect Mortgage Rates?

Historically, Fed cuts lead to lower mortgage rates within weeks. However, Trump’s trade policies could keep volatility high.

Is the Bank of Japan Really Hiking Soon?

Governor Ueda hasn’t tipped his hand, but analysts say a 2026 MOVE is plausible if Japan’s growth holds.