The Federal Reserve lowered its benchmark interest rate by a quarter point on September 17, bringing the target range for the federal funds rate to 4.00–4.25 percent. The move marks a clear turn toward easing as policymakers seek to cushion the economy against slowing growth and rising downside risks to employment.
“Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up,” the Federal Open Market Committee said in its statement. Inflation remains “somewhat elevated,” but the Fed noted that risks to the labor market have increased.
The decision was backed by Fed Chair Jerome Powell and a strong majority of the Committee. One member, Stephen I. Miran, dissented, arguing for a larger 50-basis-point cut.
Looking ahead, the Fed signaled a data-dependent approach. Officials said they will assess incoming information on labor markets, inflation and global developments before considering further moves. At the same time, the central bank will continue reducing its balance sheet by trimming holdings of Treasuries and mortgage-backed securities.
The Fed reiterated its commitment to maximum employment and 2 percent inflation over the longer run. Markets will now look to upcoming economic data to gauge whether more cuts are likely before year-end.
Source: Federal Reserve Board, FOMC Statement, September 17, 2025 link
