The September 15–16 FOMC meeting is widely expected to deliver the Fed’s first rate rise since May 2023, as policy makers reassess earlier caution linked to softer labour signals and some easing in inflation. Global policy has been mixed: from the start of the year to September 11, 25 of nearly 90 central banks cut rates for an average cumulative 85 basis points, while 25 lifted them by 75 basis points on average and 36 stayed unchanged. The Fed has been in the hold camp as the ECB raised rates twice, with another ECB move dated September 10; attention also turns to the BoJ on September 17–18 and the BoE on September 17, where a 6–3 vote, possibly 6–4, is expected.
US Economic Performance and Sector Trends
US growth has averaged 2.2% year-on-year since Q1 2025, about double the Eurozone rate, but is described as concentrated in the AI-driven investment cycle and wealth effects, with lower-income consumption under strain.
Inflation Dynamics and Fed Policy Considerations
Inflation remains above the 2% target on standard measures, though headline CPI held at 3.4% y/y in August and core eased to 2.4% from 2.5%; core CPI rose 0.29% m/m, above a 0.2% trigger, while unit labour costs point to further disinflation. The Fed Funds target sits at 3.50–3.75%, against a neutral-rate estimate of 3.25% to 4.25%; earlier late-2025 insurance cuts are cited as easier to reverse given falling unemployment, potential risks to expectations, and an energy shock linked to the Iran conflict.
