US Federal Reserve makes first rate cut of 2025 on employment risks

SCMP | Sept. 17, 2025, 2:19 p.m. | Original

Federal Reserve Chair Jerome Powell’s news conference is displayed on a screen on the floor of the New York Stock Exchange on Wednesday. Photo: AP

The US Federal Reserve has announced that it will cut interest rates by a quarter of 1 percentage point in a widely anticipated move. The US central bank also expects two more quarter-point cuts this year.

The cut puts the target range for its main lending rate at 4 to 4.25 per cent. Still, market stakeholders are watching the Fed’s next moves and their timing.

For months, US President Donald Trump had slammed Fed Chair Jerome Powell for not reducing interest rates faster, but the Fed faces a balancing act in adjusting rates, mindful of the impact on a complicated economic situation.

Inflation rose at the fastest clip in August since the start of the year, with Trump’s sweeping tariffs fuelling more risks, but the jobs market is weakening.

Stephen Miran attends a Senate Banking, Housing and Urban Affairs Committee confirmation hearing in Washington in February. Photo: Reuters
Stephen Miran attends a Senate Banking, Housing and Urban Affairs Committee confirmation hearing in Washington in February. Photo: Reuters

Explaining the rationale, Powell said at a press conference that the Fed is squarely focused on achieving the dual mandate goals of maximum employment and stable prices.

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