The Federal Reserve made its first interest rate cut of 2025 on September 17, reducing the benchmark rate by a quarter percentage point to a range of 4% to 4.25%. They indicated the possibility of two additional rate cuts later in the year, likely at the October and December meetings. This rate cut comes amid signs of a weakening labor market and ongoing inflation concerns, with the Fed seeking to balance supporting employment while keeping inflation in check.
Details of the Rate Cut
- Date: September 17, 2025
- Size: 0.25% (quarter percentage point)
- Current target range after cut: 4% to 4.25%
- Expectation: Two more rate cuts expected for 2025
- Motivation: Slowing job growth, rising inflation, and economic uncertainty
Outlook
The Federal Reserve's updated "dot plot" shows some officials expecting multiple cuts while others expect fewer, reflecting a degree of uncertainty within the committee. The overall market anticipates gradual easing rather than aggressive cuts, as the Fed carefully navigates inflation risks and labor market softness.
Thus, the next expected rate cuts are projected for the Federal Reserve's upcoming meetings in October and December 2025.
