Barclays_Federal_Reserve_Commentary_UPDATE_September_FOMC_preview_Risk_management

Please see analyst certifications and important disclosures beginning on page 16.Federal Reserve CommentaryUPDATE: September FOMCpreview: Risk managementWe expect the FOMC to cut policy rates by 25bp, to4.00-4.25%, amid rising downside risks to employment. Wethink the SEP will show little change in economic projections,but expect the dot plot to show three 25bp cuts this year, onein 2026, and one more in 2027.UPDATE This publication is an update to 'Federal Reserve Commentary: September FOMCpreview: Risk management', originally published on 12 Sep 2025 at 15:41 EDT, to correct ourexpectation for the fed funds rate after this week's FOMC meeting in a couple of places to4.00-4.25%.• The FOMC will likely cut policy rates by 25bp, to 4.00-4.25% on September 17, with thecommittee judging that the downside risks to achieving its employment mandate are rising,given the weaker-than-expected pace of payroll gains and amid rising but still-moderateinflation prints. We expect at least one dissent, from Miran if he is confirmed, and Waller coulddissent too, with both favoring larger rate cuts.• We expect the new Summary of Economic Projections (SEP) to show little change ineconomic projections, other than upward revisions to real GDP growth and a smalldownward revision to 2025 inflation. However, we expect the median dots to show three25bp cuts this year, to 3.6%, one cut in 2026 and one in 2027, as well as an unchangedlonger-run dot at 3.0%.• At the press conference, we expect Chair Powell to emphasize that downside risks toemployment are rising, amid a significant slowing in job gains and an increase in theunemployment rate, even though the latter remains low. We expect him to mention thatslower job gains reflect in part immigration restrictions and aging. We also expect him toreiterate the need to keep longer-term inflation expectations well anchored.• We retain our baseline expectation that the FOMC will deliver a total of three 25bp ratecuts this year, in September, October, and December, amid a slowing pace of payrollemployment, the unemployment rate's edging up, and rising concerns about downsiderisks to employment.• FOMC participants will likely continue their discussion of the monetary policyframework, focusing on possible improvements in FOMC communication, includingenhancements to the SEP.• We do not anticipate any new announcement about the Fed's balance sheet next week.FICC ResearchEconomics14 September 2025US Economics ResearchMarc Giannoni+1 212 526 9373marc.giannoni@barclays.comBCI, USJonathan Millar+1 212 526 4876jonathan.millar@barclays.comBCI, USPooja Sriram+1 212 526 0713pooja.sriram@barclays.comBCI, USColin Johanson+1 212 526 8536colin.johanson@barclays.comBCI, USCompleted: 15-Sep-25, 01:39 GMT Released: 15-Sep-25, 01:45 GMTRestricted - ExternalLower rates amid downside risks to employmentThe FOMC will likely cut policy rates by 25bp, to 4.00-4.25% on September 17, with thecommittee judging that the downside risks to achieving its employ