02:50 PM EDT, 09/16/2025 (MT Newswires) -- The Federal Open Market Committee is widely expected to lower the range for its federal funds rate by 25 basis points from the current range of 4.25% to 4.50%, with markets poised to look at Federal Reserve Chairman Jerome Powell's post-meeting comment and the updated Summary of Economic Projections.

Currently, the CME's FedWatch Tool sees a 96.1% chance of a 25-basis point rate reduction to a range of 4.00% to 4.25% and a 3.9% chance of a 50-basis point rate reduction to a range of 3.75% to 4.00%.

The FOMC's statement following Wednesday's meeting is due for release at 2:00 pm ET, with Federal Reserve Chairman Powell's press conference scheduled to begin at 2:30 pm ET.

Since the July meeting, there has been significant turbulence for the Fed.

Former Fed Governor Adriana Kugler resigned from her position as of Aug. 8 after not voting at the July meeting, announcing her intention to leave in a letter just two days after that meeting. President Donald Trump nominated Council of Economic Advisers Chair Stephen Miran to fill out the remainder of Kugler's term and Miran was confirmed by the Senate on Monday.

Then, on Aug. 25, Trump said that he was removing Fed Governor Lisa Cook over allegations that she falsified mortgage applications in two states. Cook would later sue Trump on Aug. 28 to remain in the position and a judge ruled on Sept. 9 that Cook could remain on the Fed Board while the case progresses. That ruling was upheld by an appeals court on Monday.

Trump's announcement came three days after Powell said in his keynote speech at Jackson Hole that a change in the policy stance may be warranted, a slight pivot toward easing, but repeated that the FOMC should proceed cautiously given that the full impact of the tariffs is still unknown.

Since that speech, there has been further division among Fed officials over the certainty of a rate reduction at the September meeting.

New York Fed President John Williams said that he believes that a reduction of rates would be appropriate if the economy evolves as expected but did not specify when the first rate reduction should occur.

Atlanta Fed President Raphael Bostic and St. Louis Fed President Alberto Musalem made similar comments, seeing the current stance of monetary policy as only marginally or modestly restrictive while cautioning that there is considerable uncertainty to the outlook.

On the other hand, Fed Governor Christopher Waller, one of the people on Trump's short list to replace Powell as chairman next year, said that he would support a 25-basis point rate reduction at the September meeting and that he believes that further rate reductions may be needed in the near term due to a weakening labor market.

The addition of Miran suggests the possibility of a dissent at this week's meeting if the FOMC chooses to lower rates by only 25 basis points and Miran prefers a 50-basis point cut.

August employment data released on Sept. 5 were weaker than expected, with payrolls growth a below-trend 22,000 and an increase in the unemployment rate to 4.3%, the highest level in almost four years.

Inflation data, particularly at the producer level, began to show the lifting effects of tariffs in August.

Since a rate reduction at this week's meeting appears to a near certainty, the focus turns to the future expectations contained in the updated Summary of Economic Projections.

In the June SEP update, the median expectation was for 50 basis points of rate reduction in 2025, ending the year at 3.9%, then a further 25 basis points of reduction in 2026 to end at 3.6% and one more 25-basis point reduction to 3.4% by the end of 2027, still above the expected long-term rate of 3%.

The FOMC could lower its growth forecasts and raise its inflation forecasts further for the remainder of the year compared with the June estimates, but it is not clear whether that would translate to an expectation of more rate reductions.

If the FOMC lowers the federal funds target range by 25 basis points at the September meeting, that would leave only one rate reduction for the remaining two meetings this year based on current projections.

Currently, there is a 76.8% chance being priced in for the federal funds rate range to be at 3.75% to 4.00% after the Oct. 28-29 meeting.