With current economic shifts, many investors are asking: when will the U.S. Federal Reserve begin cutting interest rates? The answer depends on several key data points and ongoing market conditions. 

U.S. Labor Market Performance: 
In April 2025, the U.S. economy added 177,000 jobs — surpassing expectations of 130,000 — while the unemployment rate held steady at 4.2%. This indicates relative labor market stability despite broader economic challenges. 

Growth & Inflation Trends: 
GDP contracted by 0.3% in Q1 2025 — the first decline in three years — raising concerns of a potential recession. Meanwhile, inflation rose to 2.7%, complicating the Fed’s balancing act between growth and price stability. 

Fed Policy & Market Expectations: 
The Fed kept interest rates unchanged in its latest meeting, citing ongoing uncertainty tied to global tensions and trade dynamics. Markets, however, are pricing in three rate cuts in 2025, totaling 0.75%. 

Future Outlook: 
Financial institutions like Barclays and Goldman Sachs expect rate cuts to begin in July 2025, based on current data — though this hinges on continued labor market strength and easing inflation. 

Conclusion: 
While signs point to potential rate cuts in the second half of 2025, final decisions will depend on U.S. economic performance. Investors are advised to closely monitor economic data and official Fed communications.