Markets Brace for Fed Rate Cut as Global Central Banks Hold Steady

Global markets are bracing for a highly anticipated US Federal Reserve rate cut this week, with central bank meetings in the UK, Japan, Canada, Brazil, and Norway also on the calendar. Here are the key highlights:

FOMC Meeting (Sept 16–17):
- Markets expect a 25 basis point cut, lowering the federal funds rate from 4.25–4.50% to 4.00–4.25%.
- A smaller chance remains for a deeper 50 basis point cut.
- Updated “dot plot” projections will guide expectations for the rate path: median forecasts previously stood at 3.6% (2026), 3.4% (2027), and 3.0% long-term.
US Economic Backdrop:
- GDP growth forecast at 2%+ in Q3, showing resilience.
- Inflation remains above target.
- Unemployment has risen to 4.3%, the highest in nearly four years, with the weakest jobs growth since 2010 (excluding pandemic months).
Bank of England (BoE):
- Expected to hold at 4.0%, after a 25 bps cut in August.
- Analysts see the next cut delayed beyond November as UK growth picks up and inflation lingers.
Bank of Japan (BoJ):
- Policy rates expected unchanged, though signs of economic resilience may spur future tightening.