US Fed Meet September 2025: Key takeaways from the US Fed’s latest rate cut decision

The US Federal Reserve delivered its first interest rate cut since December 2024 on Wednesday, lowering the benchmark federal funds rate by 25 basis points to a range of 4.00–4.25 percent, as expected. The move marked the first cut of President Donald Trump’s second term and came amid signs of labour market weakness and lingering inflation pressures.

Here are the key takeaways from the decision, projections and Chair Jerome Powell’s press conference:

• Rate move: The Fed cut its policy rate by 25 bps to 4.00–4.25 percent after holding steady for five consecutive meetings.
• Vote split: The decision passed 11–1. Newly appointed Governor Stephen Miran dissented, calling for a deeper half-point cut. Governors Michelle Bowman and Christopher Waller, who pushed for cuts in July, supported the quarter-point move.
• Labour market view: The Fed downgraded its assessment, saying “job gains have slowed” and “downside risks to employment have risen.” Powell added that the labour market is softening and “we don’t need it to soften anymore (and) don’t want it to.”
• Inflation view: Inflation “has moved up and remains somewhat elevated.” Powell said the risks of persistent inflation have “probably become a little less” since April, though goods prices are still feeding through and are expected “to continue to build over the rest of this year and into 2026.” He described tariff-related effects as more like “a one-time price increase” than a sustained inflationary process, noting that consumers so far have felt only a small impact.
• Future path: Policymakers signalled two further quarter-point cuts this year (50 bps in total), plus one cut in 2026 and another in 2027. One official projected as much as 125 bps of easing by December. Growth forecast: GDP growth expectations were nudged higher, to 1.6 percent in 2025 and 1.8 percent in 2026, from 1.4 and 1.6 percent previously.
• Independence: Powell rejected the idea of a “third mandate” for moderate long-term rates, saying the Fed’s dual mandate remains maximum employment and price stability. He emphasised: “It’s deeply in our culture to do our work based on the incoming data and never consider anything else.” On Trump administration pressure, Powell declined to comment directly, reiterating that the Fed remains committed to independence.
• Succession: Asked whether he will leave after his term as chair ends in May 2026, Powell said there was “nothing new” to share.
• Market at a glance: Wall Street’s response was muted, with much of the decision already priced in. The Dow Jones Industrial Average rose 0.5 percent (about 260 points), while the S&P 500 was little changed and the Nasdaq slipped 0.2 percent. Treasury yields edged higher, with the 10-year at 4.05 percent and the 2-year at 3.52 percent. The dollar firmed slightly.