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Odds of interest rate cut in September rises to 97.6%
ByAinvest
Thursday, Sep 4, 2025 1:53 am ET1min read
Odds of interest rate cut in September rises to 97.6%
The probability of the Federal Reserve cutting interest rates in September has surged to 97.6%, according to recent market expectations. This significant increase reflects the growing consensus among financial experts that the economic conditions warrant a rate reduction.Mortgage rates have been volatile in 2023, with the average 30-year fixed rate fluctuating between 6.09% and 7.79%. As of August 28, 2024, the average 30-year fixed rate stood at 6.56%, marking 32 consecutive weeks below 7% [1].
Experts predict that the Fed will likely announce a rate cut in September. Tony Julianelle, CEO at Atlas Real Estate, is cautiously optimistic about a slight decrease in mortgage rates due to the Fed's lean towards rate cuts. However, he does not anticipate a substantial drop [1]. Similarly, Danielle Hale, chief economist at Realtor.com, expects the Fed to cut rates in September, driven by a cooling labor market and inflation signals [1].
The expectation of a rate cut has been fueled by recent economic data, including a sluggish labor market and downward revisions to payroll reports. The Fed's chair, Jerome Powell, has indicated a need for some easing of monetary policy, which aligns with market expectations [1].
While the exact magnitude of the rate cut is uncertain, many analysts predict a 25-basis-point reduction. However, the impact on mortgage rates may be limited due to concerns about long-term inflation and government spending. Bond investors are closely monitoring the Fed's actions, as mortgage rates are most closely tied to the 10-year Treasury yield [1].
The odds of a rate cut in September underscore the current economic conditions and the Fed's potential response. However, it is essential to note that mortgage rates are influenced by various factors and can be volatile, making it difficult to predict future trends with certainty.
References:
[1] https://themortgagereports.com/32667/mortgage-rates-forecast-fha-va-usda-conventional
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