The probability of a Federal Reserve rate cut at the upcoming September 17, 2025 meeting has surged to 87.2%, according to CME FedWatch Tools. Futures markets are pricing in a 25 basis point reduction, which would lower the federal funds rate to a range of 4.00%–4.25%. This expectation is driven by dovish signals from Federal Reserve Chair Jerome Powell and labor data indicating that high borrowing costs are impacting employment. The current federal funds rate stands at 4.25-4.5%, following hikes aimed at curbing inflation in 2022-2023. Although inflationary pressures have eased, they remain above the Fed's 2% target. Upcoming economic indicators, such as the August jobs and CPI reports, could further influence the Fed's decision. Powell's recent comments have led to a rise in U.S. stock markets and a decline in bond yields, while internal Fed divisions and political pressures, particularly from Trump, add complexity to the decision-making process.