Federal Reserve Cuts Rates by Quarter Point and Signals More to Come
First rate cut since December, as Fed cites labor market weakness and suggests two more cuts this year
On September 17, 2025, the United States Federal Reserve reduced its benchmark interest rate by a quarter percentage point, bringing the target range to four point zero to four point two five percent.
This is the first reduction since December twenty twenty four, and reflects concerns about a weakening labor market, which officials now see as posing greater risk than inflation.
Fed Chair Jerome Powell described the move as a “risk management” cut.
Eleven out of twelve members of the rate-setting committee voted in favor, while Governor Stephen Miran dissented, advocating for a steeper half-point cut.
Despite mild inflation-pressure, the Fed signaled that it expects at least two more quarter-point rate cuts before the end of the year.
Gradual easing is now viewed as necessary to address slower job growth and rising unemployment.
Recent economic data showed hiring rates have declined and unemployment has crept upward, though inflation remains above the Fed’s two percent target.
Markets reacted with mixed signals: while rate cuts were welcomed, there remains concern about the balance between easing monetary policy and ensuring inflation does not reaccelerate.
Analysts commented that this shift marks a reorientation of Fed priorities toward supporting employment and managing economic risk.
Though the inflation outlook remains relevant, the central bank’s emphasis has tilted toward cautious easing, in part to sustain economic stability amid signs of slackening in the labor market.
This is the first reduction since December twenty twenty four, and reflects concerns about a weakening labor market, which officials now see as posing greater risk than inflation.
Fed Chair Jerome Powell described the move as a “risk management” cut.
Eleven out of twelve members of the rate-setting committee voted in favor, while Governor Stephen Miran dissented, advocating for a steeper half-point cut.
Despite mild inflation-pressure, the Fed signaled that it expects at least two more quarter-point rate cuts before the end of the year.
Gradual easing is now viewed as necessary to address slower job growth and rising unemployment.
Recent economic data showed hiring rates have declined and unemployment has crept upward, though inflation remains above the Fed’s two percent target.
Markets reacted with mixed signals: while rate cuts were welcomed, there remains concern about the balance between easing monetary policy and ensuring inflation does not reaccelerate.
Analysts commented that this shift marks a reorientation of Fed priorities toward supporting employment and managing economic risk.
Though the inflation outlook remains relevant, the central bank’s emphasis has tilted toward cautious easing, in part to sustain economic stability amid signs of slackening in the labor market.
