All eyes on jobs revision that will colour the Fed’s interest rate outlook

WITH just a week left until the US Federal Reserve’s Sep 17 meeting, markets are pricing in a high probability of the first interest rate cut since late 2024. However, the decision remains far from certain, with compelling arguments on both sides of the debate.

The Fed has maintained the federal funds rate at 4.25 to 4.50 per cent for five consecutive meetings throughout 2025, following three rate cuts in late 2024. The central bank describes the current rate level as “modestly restrictive”, indicating it’s designed to have a slight dampening effect on economic activity to help bring inflation back to the Fed’s 2 per cent target.

The case for a rate cut

The strongest argument for a September rate cut stems from concerning labour market data.