The Fed is expected to lower its target range for the federal funds rate by 25 basis points to 3.75% to 4.00% on Wednesday.
However, Generali Investments predicts that the decision could be made by a “three-way” vote.
The agency said some member countries could vote for a deep 50 basis point (bp) cut, while others could vote to keep interest rates unchanged. Paul Zangieri, senior economist at Generali Investments, said this could create an “almost unprecedented divide.”
Zangieri also said the Fed is expected to cut rates again in December, followed by a final rate cut in the first quarter of 2026. Fed Chairman Jerome Powell is expected to explain the rate cut as a “risk management measure” at a press conference, but he is not expected to provide any policy guidance for the December meeting.
Analysts at research firm Wrightson suggested the Fed could be ready to end its quantitative tightening process this week.
The agency said recent trends in the overnight lending market suggest that lending conditions are tightening and banks' reserve levels are approaching equilibrium levels. Wrightson's team said the Fed's actions this week will be prudent actions aimed at preventing undue pressure on the market.
*This is not investment advice.
