Will the Fed keep diverging from other central bank policies?

Key Points

1. There is a 91% chance the FOMC will lower rates by 25 basis points in September 2025, per CME Group data.

2. The ECB has cut rates twice in 2025, with benchmark borrowing costs more than 2% lower than the US, while the BOE issued a cut in May and held rates in June.

3. Fed Chair Powell emphasizes monitoring economic data before adjusting policy, citing concerns over tariffs and labor market risks.

4. Bank of America analysts suggest the Fed's first rate cut may not occur in fall 2025, noting flat labor market conditions and rising unemployment.

5. The ECB and BOE have expressed concerns over uncertain trade policy and global unpredictability, influencing their rate decisions.