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FOMC Policy Announcement & SEP — Rate Cuts Restart
As expected, the FOMC cut policy rates by 25 bps, with the fed funds target range at 4.00%-to-4.25%. This restarts the rate cut campaign which had been on hold since December (after a total of 100 bps in the final four months of last year). The Fed was waiting to see how the Administration’s economic policies unfolded (particularly on tariffs) along with their economic impacts (particularly on inflation). Until recently, solid labour market conditions, acknowledged as recently as the July 30 confab, afforded the Fed time to wait. But since then, the labour data have weakened significantly. The reference to ... (full story)
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Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen. In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4‑1/4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective. FOMC STATEMENT COMPARE: pic.twitter.com/6gTcajtaKz One dissenter: Voting against this action was Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting. FED SAYS DOWNSIDE RISKS TO EMPLOYMENT HAVE RISEN
The September 2025 FOMC meeting will conclude on Wednesday, September 16 at 2:00 ET. Fed Chairman Powell’s press conference will begin at 2:30 ET. As of writing, Fed Funds futures traders are pricing in 96% odds of a 25bps interest rate cut per CME FedWatch (with an outside chance of a 50bps “double” rate cut). Assuming the Federal Reserve cuts interest ...
The Federal Reserve Open Market Committee cut the fed funds policy target range by 25bps as widely expected and priced. Rates rallied at first upon seeing the dot plot of the Committee’s future rate moves, but then quickly sold off on a combination of rethinking the projections and in response to remarks during the press conference. Overall, the effect was ...
