Investors and policymakers are preparing for what would be a striking pivot: the Federal Reserve is set to lower its policy rate on Sept. 17, according to the Financial Times’ Monetary Policy Radar, even as inflation has recently shown signs of firming. Futures markets now price an initial cut this month, followed by a pause, another reduction in December and a further sequence of cuts across 2026 as political influence on the Federal Open Market Committee grows and a new chair takes office next May.

The decision, if implemented, would mark an unusual juncture in the post‑pandemic policy cycle. After lifting the federal funds rate into a range that reached the high single digits of percentage points relative to pre‑pandemic levels, the Fed has faced a labor market that many officials describe as still tight and inflation readings that have repeatedly exceeded the 2 percent target. The apparent willingness to lower rates despite those readings signals a reweighting of risks: shorter‑term growth and financial stability are being prioritized over aggressive disinflation.

The FT’s Monetary Policy Radar frames this as both a market‑driven and politically conditioned outcome. Sources cited in the FT suggest the president is pressing appointees to favor lower rates, and that a new Fed chair, whose term would begin next May, is expected to align with that approach. That dynamic raises questions about central bank independence at a moment when credibility in anchoring inflation expectations is already fragile. Economists warn that once expectations become unmoored, the real economic cost of restoring price stability rises substantially.

Market implications are immediate and broad. Anticipation of cuts typically lowers short‑term Treasury yields and reduces borrowing costs, supporting equity prices and refinancing activity. But a preemptive easing while inflation is rising risks reigniting price pressures and could steepen the yield curve if long‑term inflation premiums rise. For global markets, easier U.S. policy tends to weaken the dollar and prompt capital flows into emerging markets, amplifying both opportunity and outsized risk for countries with large external financing needs.

Policy analysts say the sequencing now described — an early cut, a pause, another move in December, then a more sustained easing in 2026 — would be driven as much by political and governance shifts as by macroeconomic fundamentals. “If the FOMC becomes more politically aligned with fiscal authorities, the ability to use interest rates as a restraint on inflation diminishes,” said an independent central‑bank scholar who asked not to be named. That could shorten the Fed’s conventional toolkit, increasing reliance on macroprudential measures to manage financial excess.

Longer term, the episode would likely reshape investor assumptions about the terminal rate and the pace of normalization after crisis periods. If cuts do succeed in sustaining consumption without reigniting inflation, growth could enjoy a multi‑year lift; if not, the Fed may face a sharper and more costly re‑tightening later. Either outcome underscores the difficult tradeoffs ahead: balancing the dual mandate of maximum employment and price stability in an environment where political currents are now part of the monetary calculus.