Federal Reserve Cuts Interest Rate Amid Signs of Labor Market Weakness

Posted on Sep 18, 2025 / USA

Federal Reserve Cuts Interest Rate Amid Signs of Labor Market Weakness

On September 17, 2025, the U.S. Federal Reserve made its first rate cut since December, lowering its benchmark interest rate by 25 basis points to a 4.00%–4.25% range. This move reflects growing concern among Fed officials about softening job growth, rising unemployment rates—especially among vulnerable groups—and a declining workweek. While inflation remains above target, the Federal Open Market Committee signaled that risks to employment have become more prominent in its policy calculations. Two additional rate cuts before year-end are now projected, though one dissenting member, Stephen Miran, preferred a steeper 50-basis-point cut. The Fed also reaffirmed its commitment to returning inflation to 2% while carefully weighing incoming data.



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