Federal Reserve Finally Cuts Interest Rates, Signals It's Just the Beginning
The Federal Reserve decided Wednesday to lower its benchmark interest rate by one-quarter of a percentage point.
In a news release, the Fed said that the new target rate will be 4 to 4.25 percent. The Federal Open Market Committee’s vote was 11 to 1 in favor of the cut.
Newly installed Federal Reserve Governor Stephen Miran voted against the quarter-point move, preferring a larger half-point cut at this time.
The Fed noted that its mandate is both to achieve an inflation rate of 2 percent over the long run and to achieve full employment.
Balancing those goals, the committee determined that a rate cut was appropriate now.
Further, “A narrow majority of officials penciled in at least two additional cuts this year, implying consecutive moves at the Fed’s two remaining meetings in October and December,” The Wall Street Journal reported.
Federal Reserve Chairman Jerome Powell told reporters, “While the unemployment rate remains low, it has edged up. Job gains have slowed, and downside risks to employment have risen. At the same time, inflation has risen recently and remains somewhat elevated.”
“In support of our goals, and in light of the shift in the balance of risks, today the Federal Open Market Committee decided to lower our policy interest rate by a quarter percentage point,” he added.
The Fed FINALLY cuts interest rates by 25 basis points (0.25%).
Did Jerome Powell finally get the message?
Looks like Trump was right…but Powell held off as long as he could.
The president will definitely want to see a bigger cut than 0.25%…
The announcement came moments… pic.twitter.com/NQ5S90S2Ip
— Vigilant Fox 🦊 (@VigilantFox) September 17, 2025
The unemployment rate notched slightly up in August to 4.3 percent. Meanwhile, the personal consumer price index, which excludes the more volatile food and energy prices, went up to 2.9 percent in July from 2.6 percent in April, The Wall Street Journal said.
“A majority of the FOMC is now targeting two further cuts this year, indicating that the doves on the committee are now in the driver’s seat,” Simon Dangoor, head of fixed income macro strategies at Goldman Sachs Asset Management, told CNBC.
“We think it would take a significant upside surprise in inflation or labor market rebound to take the Fed off its current easing trajectory,” he added.
Last week, President Donald Trump called for interest rates to be lowered after the producer price index — a key indicator of inflation from the business perspective — dropped 0.1 percent in August.
🚨From @WhiteHouse
“Just out. No inflation!!!” https://t.co/30myuoBeMJ
— Commentary Donald J. Trump Posts From Truth Social (@TrumpDailyPosts) September 10, 2025
Cutting interest rates makes both mortgage rates and consumer credit rates less expensive, which can stimulate economic growth.
In June, Trump released a public note to Powell written on a chart of other nations’ interest rates around the world. Trump wrote, “Jerome, you are, as usual, ‘too late.’ You have cost the USA a fortune — and continue to do so.” The U.S. rate was among the highest in the industrialized world.
Donald J. Trump Truth Social 06.30.25 01:09 PM EST
Jerome “Too Late” Powell, and his entire Board, should be ashamed of themselves for allowing this to happen to the United States. They have one of the easiest, yet most prestigious, jobs in America, and they have FAILED — And… pic.twitter.com/hXKHbZ7R9l
— Commentary Donald J. Trump Posts From Truth Social (@TrumpDailyPosts) June 30, 2025
Biden-appointed Fed Governor Lisa Cook participated in Wednesday’s meeting after an appeals court allowed her to stay on the job as she appeals Trump’s decision to fire her.
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