Will the Fed cut interest rates in 2025?

The Federal Reserve may cut interest rates in 2025, but recent inflation data—like the June CPI rise to 2.7%—has made the timing uncertain. Markets are currently split on whether a rate cut will happen in September or later, depending on how inflation trends in the coming months.

How does the Fed's rate decision impact everyday finances?

Fed rate decisions directly impact mortgage rates, credit card interest, and savings account yields. A rate cut could lower borrowing costs but also reduce returns on savings products like CDs and high-yield accounts.

What should I do if rate cuts are delayed?

If rate cuts are delayed, consider locking in current CD rates, reviewing your debt strategy, and ensuring your investment plan is built for long-term stability. A financial advisor can help you adjust your strategy for higher-for-longer rate scenarios.

Will the Fed Finally Cut? What Rising CPI Means for Your Wallet

HFF Staff Writer
2 days ago
3 min read

We’re in a bit of a “will-they-won’t-they” with the Federal Reserve right now—and no, it’s not the fun kind like Jim and Pam. Traders, economists, and just about anyone with a 401(k) have been laser-focused on one big question: Will the Fed finally cut rates in September?

The short answer? It’s complicated. The long answer? Well, let’s unpack it.

What Just Happened with CPI?

In June, the Consumer Price Index (CPI) came in a tick higher than expected—2.7% year over year, up from 2.6% in May [1]. While that doesn’t sound like a dramatic spike, it was enough to rattle rate cut expectations. Markets had been hoping for smoother inflation data to give the Fed room to finally ease up on interest rates.

Spoiler: That 2.7% number was just sticky enough to keep the Fed’s finger off the trigger—for now.

Why the Fed Is Hesitating

The Fed’s dual mandate is to promote maximum employment and keep inflation around 2%. We're making progress, but inflation has been stubbornly hovering just above that target. That June CPI uptick made it harder for the Fed to justify a cut, especially when you consider that core inflation (which excludes food and energy) is still running around 3.4% [2].

Plus, consumer spending hasn’t slowed enough to trigger concern. People are still buying, even with elevated interest rates, and that tells the Fed the economy isn’t cooling as quickly as they’d like.

In short? The Fed doesn’t want to risk cutting too soon and reigniting inflation.

So… What’s the Market Betting On?

Traders have been flip-flopping harder than a politician in an election year. After the June CPI data dropped, futures markets slashed the odds of a September cut from over 70% to closer to 50% [3]. That’s a significant pullback in expectations—and it shows just how sensitive markets are to inflation data.

Bottom line: The Fed’s next move will likely hinge on July and August CPI numbers. If inflation cools convincingly? September might be back on the table. But if it stays hot? Rate cuts could get pushed to December or even 2026.

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What Does This Mean for You?

Whether or not you spend your mornings reading Fed minutes (if so, we should talk hobbies), the decisions made by Jerome Powell and company directly impact your financial life.

Here’s how:

1. Mortgages and Loans

High interest rates mean higher borrowing costs. So if you’re shopping for a home, a car, or taking out a business loan, you’re likely paying more than you would’ve a few years ago. A rate cut could ease those costs, but until that happens, it’s worth revisiting your budget and locking in fixed rates when possible.

2. Savings Accounts and CDs

The silver lining? Savers are finally seeing meaningful interest again. If the Fed does cut rates later this year, those juicy yields on high-interest savings accounts and CDs might start to drop. If you're sitting on cash, it might make sense to lock in current CD rates.

3. Investments

The stock market tends to celebrate lower interest rates—especially in tech and growth sectors. If rate cuts are delayed, we may see more short-term volatility. But here’s the thing: trying to time the market around Fed decisions is a tricky game, even for the pros.

Instead, we encourage long-term investors to stay diversified, focus on their goals, and tune out some of the noise.

What Should You Do Right Now?

Honestly? This is a great moment to step back and review your broader financial plan.

Ask yourself:

Are you positioned to weather higher rates for longer?
Could a delayed rate cut impact your cash flow or debt payments?
Are there opportunities to optimize your portfolio in a high-rate environment?

And if you’re not sure how to answer those questions—we’re here to help.

Final Thoughts

The Fed’s next move is still up in the air. While September is still in play, that small bump in June’s CPI was enough to shake some confidence. The good news is, you don’t have to sit on the sidelines, hoping for a rate cut to improve your financial situation.

At Halter Ferguson Financial, we help clients navigate uncertainty with personalized strategies designed for real life—not just Wall Street headlines. If you’d like help reviewing your plan or adjusting course, reach out.

Sources:

[1] U.S. Bureau of Labor Statistics. Consumer Price Index Summary, June 2025.https://www.bls.gov/news.release/cpi.nr0.htm

[2] Federal Reserve Economic Data (FRED). Core CPI (June 2025).https://fred.stlouisfed.org/series/CPILFESL

[3] CME FedWatch Tool. Rate hike probability tracker (July 2025).https://www.cmegroup.com/tools-information/quikstrike/fed-funds.html