09/17/2025
The Federal Reserve cut interest rates Wednesday for the first time this year as the central bank attempts to ease pressure on the weakening U.S. job market.
The Federal Open Market Committee (FOMC) — the panel of Fed officials responsible for setting borrowing costs — cut its baseline interest rate to a range between 4 percent and 4.25 percent, a reduction of 0.25 percentage points.
Analysts and traders widely expected the Fed to cut interest rates Wednesday after several months of alarming employment data and unprecedented pressure from President Trump, who has sought to remove members of the Fed’s board.
While Federal Reserve Chair Jerome Powell, the main subject of Trump’s pressure campaign, had previously said he was wary of cutting rates until the inflationary effect of Trump’s tariffs sorted out, the fading U.S. labor market pushed the Fed to risk its progress in the fight against rising prices.
“This is quite an unusual situation,” Powell said during a Wednesday press conference, describing the tension in between the Fed’s efforts to stave off tariff-driven inflation while supporting the job market.
Powell said that while the Fed expects inflation to increase due to Trump’s tariffs, the bank is seeing the labor market take far more damage under the weight of higher import taxes and steep cuts to immigration.
“Our policy had been really skewed toward inflation for a long time. Now we see that there’s downside risk, clearly, in the labor market, so we’re moving in the direction of more neutral policy.
