US Federal Reserve likely to cut interest rate for third straight time | Key points

The Fed’s rate decision, along with its updated quarterly economic forecasts, will be released at 2 pm on Wednesday (12:30 am on Thursday in India). This will be followed by a post-meeting press conference by Fed Chair Jerome Powell 30 minutes later.

US Fed rate cut: Here’s all you need to know

(1.) The US central bank is widely expected to lower its benchmark rate by a quarter percentage point, Bloomberg reported. This would bring the federal funds rate to a target range of 4.25% to 4.5%.

(2.) However, such a decision by the Fed would take the benchmark rate at well above the 2.9% median estimated at the September meeting.

(3.) As per Bloomberg, the most scrutinised portion of the updates estimates will be the “dot plot” or the expected rate path. Officials are expected to pencil in as many as three cuts for next year.

(4.) In September, policymakers forecast only two rate cuts for 2025.

(5.) The language of the Fed statement is likely to be similar to the one used in November. “The risks to achieving the Fed’s goals for employment and inflation are roughly in balance,” the statement said.

(6.) However, policymakers could also add that they expect to lower interest rates “gradually,” according to economists at Barclays.

(7.) Tim Duy, chief US economist for SGH Macro Advisors, said he expects the Fed to hold the rate steady in January after cutting it this week.