Super Central Bank Weekly Outlook: Powell's 25 basis point rate cut in September is not surprising; the real powder keg is in the "Interest Rate Dot Plot".

US President Trump recently stated that the Federal Reserve (FED) is expected to "significantly cut interest rates." The market widely bets that at 2 a.m. on September 18, Powell will announce a 25 basis point rate cut, with the probability remaining above 90% for a month. However, for Wall Street and global traders, the rate cut itself has long been a consensus; the key factor that will truly determine the direction of funds will be the interest rate dot plot released at the same time and Powell's post-meeting remarks.

The consensus on interest rate cuts has been set, focus shifts to the 'dot plot'

According to S&P Global analysis, the median estimate of decision-makers shows:

1. The policy interest rate may drop to about 3.6% in 2026.

2. Drop to 3.4% again in 2027.

If the slope of the bitmap is gentle, it means that the Fed will take a gradual approach to easing; if the curve drops sharply, it indicates that decision-makers are increasingly concerned about an economic slowdown.

Background on Interest Rate Cuts: Economic Data and Political Pressure Intertwined

This interest rate cut expectation comes from multiple signals of economic slowdown:

1. CPI and PPI have continued to decline.

2. The number of initial jobless claims has risen, indicating a cooling labor market.

On the other hand, Trump's administration's tariff policy may drive up prices, bringing uncertainty to inflation and forcing Powell to strike a delicate balance between "stimulating the economy" and "controlling inflation."

Market Pricing: Two More Rate Cuts Before Year-End

According to market expectations:

1. The probability of a 25 basis point rate cut at this meeting is over 90%.

2. The probability of a 50 basis point rate cut is only about 7%.

3. In the remaining three meetings this year, the likelihood of a 25 basis point rate cut at each meeting is higher.

This means that the Fed may adopt a "moderate but sustained" pace of interest rate cuts to avoid excessive market volatility.

This week's 'Super Central Bank Week' key schedule

September 15: U.S. September New York Fed Manufacturing Index

September 16: US August Retail Sales, Import Price Index

September 17: FOMC announces Interest Rate decision and economic forecast summary

September 18: Powell holds a monetary policy press conference

September 19: Initial Jobless Claims in the United States

September 20: US August Leading Economic Index MoM

Conclusion

The importance of this interest rate cut in September lies not in the 25 basis points itself, but in how the interest rate dot plot depicts the policy path for the next two years, and how Powell maintains a balance between economic data and political pressure. For the market, this chart is the real "powder keg" — once more aggressive easing signals are released, it could trigger a global repricing of funds, leading to severe volatility in everything from U.S. stocks to Bitcoin.