NextFin news, Deutsche Bank's U.S. chief economist, Matthew Luzzetti, announced on Sunday that the Federal Reserve is expected to cut interest rates by 25 basis points at each of its upcoming meetings in September, October, and December 2025. This updated forecast was released just one day before the Federal Open Market Committee (FOMC) convenes on Tuesday and Wednesday in Washington, D.C.
Previously, Deutsche Bank anticipated only two rate cuts in September and December, but the bank revised its outlook to include an additional cut in October. Luzzetti noted that while the baseline forecast does not include further easing in 2026, the risks are skewed toward additional rate reductions depending on labor market and inflation developments.
The Federal Reserve's decision to cut rates comes amid signs of a softening U.S. labor market, with unemployment rising to 4.3% in August 2025 and modest job growth, as well as inflation remaining above the Fed's 2% target but showing signs of easing. Market expectations currently price in a 91% probability of a 25-basis-point cut at the September meeting.
These anticipated rate cuts are expected to influence mortgage rates and broader financial markets. As of Sunday, the average 30-year fixed mortgage rate stood at approximately 6.54%, with refinance rates slightly lower, reflecting market anticipation of the Fed's easing policy.
The Federal Reserve's rate-setting meetings are closely watched by investors, economists, and policymakers, as they signal the central bank's approach to balancing inflation control with economic growth. Deutsche Bank's forecast aligns with other financial institutions projecting multiple rate cuts through the end of 2025 and into 2026.
Source: Deutsche Bank report published on Sunday, September 14, 2025, and investingLive.com; Federal Reserve FOMC meeting scheduled for Tuesday and Wednesday, September 16-17, 2025, in Washington, D.C.
Explore more exclusive insights at nextfin.ai.
