US Fed meeting: In line with expectations, the US Federal Reserve’s Federal Open Market Committee (FOMC), chaired by Jerome Powell, cut the key benchmark interest rate by 25 basis points on Wednesday, 17 September 2025. This brings the federal funds rate down to a range of 4.00% to 4.25%. This was the first Fed rate cut since December 2024, when the central bank had lowered rates by 25 basis points.
Recent weakness in the job market had raised expectations that the Fed would cut rates even though inflation remains above its 2% target level.
“Recent indicators suggest that the 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,” said the Federal Reserve.
The US unemployment rate jumped to 4.3 per cent in August, up from 4.2 per cent in July. US job growth was at 22,000 in August, sharply dropping from 79,000 in July 2025. Besides, the US economy created 9,11,000 fewer jobs in the 12 months through March than previously estimated.
US Fed policy: Key highlights
Here are five key takeaways from the US Fed’s September policy decision:
1. US Fed cuts rates
The US Fed trimmed benchmark interest rates by 25 bps and said that it will assess incoming data, the evolving outlook, and the balance of risks to decide if more rate cuts are required.
The FOMC voted in favour of a 25-basis-point rate cut by an 11:1 majority. Stephen Miran was the only dissenter, preferring to lower the target range for the federal funds rate by 50 basis points.
“The committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4-1/4 per cent. 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,” said the US Fed.
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The central bank added that it will continue reducing its holdings of treasury securities, agency debt, and agency mortgage‑backed securities.
(This is a developing story. Please check back for fresh updates.)
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