Fed Cuts Rates by Quarter Point, Signals Further Easing

Washington, Sept. 17 - The Federal Reserve lowered its benchmark federal funds rate by 25 basis points to a 4.00 percent-4.25 percent range and indicated two more cuts likely this year in response to a cooling labor market.

The move marks the Fed’s first rate reduction since December and underscores shifting priorities toward supporting employment amid slowing job gains and persistent uncertainties around economic growth.

Key Details

Decision and Rationale: The Federal Open Market Committee voted 11-1 to trim rates, citing slowed job growth and elevated inflation risks; Stephen Miran dissented, preferring a 50-basis-point cut.
Dot Plot Outlook: Median projections show two additional 25-basis-point reductions before year-end, aiming to balance the dual mandate of price stability and maximum employment.
Powell’s Remarks: Chair Jerome Powell emphasized that downside risks to employment have risen and confirmed ongoing reductions in the Fed’s securities holdings.

Market Reaction and Context

U.S. equity markets opened higher but closed mixed after the announcement. Treasury yields eased modestly.
The cut responds to recent data showing job growth decelerating from an average of 130,000 monthly hires in May to 29,000 for the three months ending in August.
Political Pressure: President Trump’s calls for more aggressive easing and recent board appointments heightened scrutiny of the Fed’s independence.

What Comes Next

The Fed will reassess incoming data on labor market conditions, inflation pressures and financial developments before its October meeting. Officials stand ready to adjust policy further if risks to the economic outlook intensify.