A framed eagle is seen through the construction fence of the Mariner S. Eccles Federal Reserve Building, the headquarters of the Federal Reserve Board, on September 16, 2025, in Washington, DC.
Kevin Dietch | Getty Images News | Getty Images
The US Federal Reserve is widely expected to cut its benchmark interest rate by a quarter of a percentage point to a range of 3.5% to 3.75% on Wednesday.
However, given that traders are almost certain that a rate cut will occur (88.6% chance to be exact, according to the CME FedWatch tool), this news has likely already been priced in by the market.
That means any hint of restraint could weigh on stock prices. In fact, the talk in the market is that the Fed may be cutting rates “hawkishly,” meaning that while it is cutting rates, it is signaling that it may be a while before it cuts rates again.
The “dot plot,” or what Fed officials predict interest rates will be like over the next few years, may be the clearest signal of a hawkish stance. Investors will also analyze Chairman Jerome Powell’s press conference and central bank officials’ estimates of U.S. economic growth and inflation to determine the Fed’s future interest rate path.
In other words, the Fed could dampen market sentiment even if it cuts interest rates. Perhaps year-end festivities will be toned down this year.
