Federal Reserve Meeting: US Central Bank Cuts Interest Rates by 25 bps, Signals More Easing Ahead

The Federal Reserve cut interest rates by 25 basis points in its September 2025 policy meeting. The new benchmark range is now 4% to 4.25%. The move comes as the US faces weak job growth and high inflation.

According to Reuters, this is the first cut in over a year. The Fed also projected two more rate cuts in 2025. The decision was closely watched across global markets.

Federal Reserve Meeting Interest Rates: What Changed and Why

The cut was widely expected. The latest jobs data showed only 22,000 new positions added in August. June and July numbers were also revised down. This confirmed a softer labor market.

The Fed statement said the decision supports both jobs and price stability. Officials stressed their 2% inflation target. They also confirmed that bond sales and balance sheet reduction will continue.

Markets reacted with sharp moves. The Dow gained over 300 points. The S&P500 and Nasdaq gave up early highs. Investors are balancing hopes on tech stocks against weak macro data.

Global Market Impact After the Fed Rate Cut

Precious metals saw heavy swings. Gold steadied at $3,670 an ounce. Silver dropped to $42.01. Traders saw the move as a hedge against future uncertainty.

Treasury yields also reacted. The 10-year note slipped below 4%. This signals weak long-term confidence. The dollar index dropped further after the announcement.

The Fed’s new dot plot shows GDP growth near 2% this year. Inflation is still seen at 3% in 2025. That is above the 2% goal. Officials gave more weight to job market risks.

Economic Outlook and What Comes Next

The policy shift shows the Fed is cautious. They want to balance inflation with rising unemployment. Two more cuts are now possible before year end.

This could ease borrowing costs for households and firms. Mortgage, credit card, and loan rates may come down. But inflation above 3% still leaves pressure on prices.

Analysts say the Fed must tread carefully. Cutting too fast could fuel inflation. Moving too slow risks deeper job losses. Markets will now watch every new data release.

The Federal Reserve meeting interest rates decision marks a turning point in 2025. The balance between jobs and inflation will guide every step ahead.

FYI (keeping you in the loop)-

Q1: What did the Federal Reserve decide in September 2025?

The Fed cut rates by 25 basis points to 4%–4.25%. They also signaled two more cuts this year.

Q2: Why did the Fed cut rates now?

Weak job data and sustained inflation pressures forced action. The goal is to support jobs while targeting 2% inflation.

Q3: How did markets react?

The Dow gained more than 300 points. Nasdaq and S&P500 slipped. Gold stayed flat, while silver fell.

Q4: What is the Fed’s outlook for 2025?

Growth is seen at 2%. Inflation is projected at 3%. Officials expect more risks from unemployment.

Q5: Will borrowing costs drop soon?

Yes. Mortgage and loan rates may ease with cuts. But inflation pressure remains.

Sources

Sources: Reuters; Associated Press; Bloomberg; US Federal Reserve official statement.