The Fed's first interest rate cut this year: An overview of dove/hawk analyst evaluations and opinions.

Author: Chloe, ChainCatcher

The Federal Reserve (Fed) announced a 25 basis point rate cut at 2 a.m. on September 18, reducing the interest rate from 4.25%-4.50% to 4.00%-4.25%. This is the first rate cut by the Fed since December of last year, after maintaining the interest rate at five consecutive meetings this year, and it is expected to signal the start of a new round of rate cuts.

ChainCatcher summarizes the key points of the FOMC interest rate decision meeting, including Powell's speech content, the outlook for the U.S. economy, and feedback from major institutions and analysts.

More than 70% of officials prefer to implement 1 to 3 interest rate cuts within 2025.

This time, the Federal Open Market Committee voted 11 to 1 to lower the benchmark interest rate by 25 basis points. The newly appointed Federal Reserve Board member Stephen Miran was the only representative to vote against this decision. He was appointed by Trump and officially took the oath of office as a Fed governor after a rapid Senate vote on the 16th. The opposition reason claimed that the rate cut should be more aggressive, suggesting a one-time cut of 50 basis points instead of the final approved 25 basis points. His call for more radical easing was also reflected in the dot plot, where his prediction point was the only one that was significantly lower, indicating his support for a cumulative rate cut of 150 basis points by the end of the year.

According to predictions, the Federal Reserve is expected to cut interest rates by another 75 basis points in 2025, highlighting increasing concerns about risk balance. Although the Federal Open Market Committee emphasizes its commitment to the 2% inflation target, its tone is more inclined to support growth and employment in the context of slowing economic momentum.

Data from the 19 officials participating in this FOMC meeting shows that the majority of officials (76.3%) tend to favor 1 to 3 rate cuts within 2025. Among them, about half (47.4%) support a cut of 75 basis points, which corresponds to three cuts. Additionally, 31.6% support a cut of 25 basis points, while a minority (5.3%) believe that no more cuts should be made this year or even support a significant cut of 150 basis points. This indicates that, against the backdrop of ongoing signs of economic slowdown and gradually easing inflation pressures, Federal Reserve officials generally lean towards maintaining an accommodative monetary policy and expect there may still be multiple rate cuts before the end of the year to stimulate economic growth.

The market currently believes that the central bank is preparing for a more accommodative policy path, with the future direction leaning entirely towards dovishness. However, Bitcoin's response has been sluggish, with price consolidation dominating the overall directional momentum.

Powell stated after the meeting that he continues to worry about the inflationary pressures brought by tariffs, “Our obligation is to ensure that one-time price increases do not evolve into a persistent inflation problem.” Powell also mentioned, “Currently, labor demand has weakened, and the recent pace of job creation seems to be below the breakeven level needed to maintain the unemployment rate.”

When asked about the possibility of further rate hikes before the end of the year, Powell took a cautious stance, stating that the Federal Reserve is currently in a “meeting-by-meeting adjustment situation.”

Institutional Observation

Principal Asset Management Chief Strategist Seema Shah: “The dot plot presents a variety of viewpoints, accurately reflecting the complex economic landscape caused by changes in labor supply, concerns over data accuracy, and uncertainty in government policies.”

CME Group market traders: “The FedWatch tool calculates the market implied probability of interest rate changes through the prices of 30-day federal funds futures contracts, predicting that there will be 2 to 3 more rate cuts next year.”

Seema Shah, Chief Global Strategist at Principal Asset ManagementSM, stated, “The dot plot for next year aggregates various perspectives and accurately reflects the complexity of the current economic outlook, including changes in labor supply, issues with data measurement, and the turbulence and uncertainty of government policies, all of which further obscure this outlook.”

Dove/Hawk Analyst Viewpoints Compilation

Dovish view

Michael Gapen ( Chief U.S. Economist at Morgan Stanley ): “The Fed cut rates by 25 basis points as expected and signaled that further cuts are likely in the future. The Fed currently believes that the downside risks to employment have increased, which justifies today’s 25 basis point cut and a total of 75 basis points cut by the end of the year. The updated forecast shows that inflation may remain above 2.0% for a longer period, with PCE inflation revised up from 2.4% to 2.6%. Overall, this is a dovish signal.”

Blair Shwedo ( Bank of America ): “The Fed's decision was not surprising, and risk assets and U.S. Treasuries seem to be focused on the Fed's expectation of two more rate cuts this year. The decision from this meeting should generally be positive for risk assets, and we should see credit risk spreads remain at historically tight levels.”

Brian Jacobsen ( Chief Economist of Annex Wealth Management ): “The Fed's decision aligns with our expectations, while Milan requested a larger rate cut (50 basis points) with a dissenting vote.”

hawkish view

Michael Rosen (Chief Investment Officer of Angeles Investments ): “In this decision, the Fed not only lowered interest rates but also raised its forecast for future inflation. This reflects the recent slowdown in job growth and a slight increase in the unemployment rate. The Fed hopes to stimulate economic activity and improve job opportunities through rate cuts. On the other hand, inflation remains above the Fed's target of 2%. The upward revision of the inflation forecast indicates that the Fed believes price pressures may be more persistent than previously thought. This necessitates a careful balance between lowering rates and combating inflation, as they need to prevent excessive easing from exacerbating price increases while also avoiding a rapid tightening that could further deteriorate the job market.”

Christopher Hodge ( Natixis Chief U.S. Economist ): “Powell needs to explain why the dot plot shows more rate cuts in 2026 under a scenario of lower unemployment and higher inflation. The dot plot is a difficult-to-interpret patchwork of predictions, and the dovish dot plot seems to conflict with the predicted inflation/labor market dynamics.”

Finally, several analysts in the market noted significant differences among Fed officials. Brij Khurana (Wellington Management) pointed out: “Only Milan disagreed, pushing for a 50 basis point rate cut. The market had speculated that both Waller and Bowman would advocate for a 50 basis point cut at this meeting.”

Despite most officials predicting in the latest dot plot that there is still room for two rate cuts this year, bringing the benchmark rate to 3.5%–3.75%, the market is caught in a tug-of-war between caution and disagreement; Mark Malek of Siebert Financial remains cautious about the overly optimistic outlook, believing that premature enthusiasm could lead to more severe sell-offs in stocks and bonds, while Peter Cardillo of Spartan Capital views this decision as a dovish signal, expecting yields and the stock market to continue rising.