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The Federal Reserve has trimmed its key interest rate by a quarter-point, signalling two additional cuts this year amidst concerns over the U.S. labour market's health. This marks the first rate reduction since December, adjusting the short-term rate from 4.3% to 4.1%. The decision reflects a strategic pivot from focusing on inflation to addressing the slowdown in job growth and rising unemployment rates.

 

The rate cut is expected to lower borrowing costs on mortgages, car loans, and business loans, potentially stimulating economic growth and employment. Fed Chair Jerome Powell and the Fed officials had previously maintained the rates stable, assessing the impacts of tariffs and tighter immigration enforcement under President Trump’s policies. However, recent data showing slowing hiring and an uptick in unemployment prompted this policy shift.

 

“Downside risks to employment have risen,” stated the Fed following its two-day meeting. The central bank plans two more cuts in 2025 but anticipates just one in 2026, falling short of earlier investor expectations for five cuts through the year and next. The decision faced minimal dissent, with Stephen Miran, a Trump appointee, being the sole voice against it, highlighting Powell’s ability to maintain a unified committee.

 

Legal and political tensions accompany these economic challenges. President Trump’s attempt to fire Fed Governor Lisa Cook marks a historical first, interpreted as an unprecedented challenge to the Fed’s independence. Meanwhile, inflation persists, measured at 2.9% in August, surpassing the target despite weak hiring—a rare economic scenario often mitigating inflation.

 

Amidst these challenges, Trump continues to pressure the Fed for more aggressive cuts, advocating for a three-percentage-point reduction. His administration’s legal battle to remove Cook remains active, with courts recently ruling the firing violated due process rights. With Fed critics pushing for further rate cuts, alignment with other global central banks remains divergent, as seen in the ECB and the Bank of England’s recent decisions to hold rates steady.

 

Key Takeaways:

 

• The Fed reduced its key interest rate to 4.1%, hinting at two more cuts by the end of 2025.
• Concerns over job market health prompt a shift from inflation focus.
• Trump’s political moves challenge the Fed’s independence, as inflation remains high.

 

Related Stories:

Read more World News Stories here

 

  Adapted by ASEAN Now from MPR News 2025-09-18

 

 

Means the US dollar weaker against THB.

SLASH you say lol 😂 please more like a prudent responsible nip would be appropriate in my view…..well done fed slow and careful resisting the felon’s attempts to break the bank.

Trump wanted a 2-3% drop. The markets expected 0.25%.   Some hoped for 0.5%.  The actual cut is 0.20%, so even less than expected.

 

Hardly “slashing“.

A good quote :

Powell’s press conference, which just concluded, offered nothing of substance whatsoever. Not even a hint of a tangible solution or clear path forward. Instead, it was an hour of doublespeak, vague qualifiers, and hedging, which basically summed up to this: “We cut today because the pressure to do so was overwhelming, and because the labor market gave us cover. But we really have no idea how we’re going to balance our two objectives—price stability and maximum employment—going forward.”

 

https://www.zerohedge.com/markets/jerome-powells-fed-enters-nightmare-territory

Could this strengthen the dollar? It sure needs some help after suffering under the Trump tariff failures. 

What the Fed does has surprisingly little to do with reality.  Markets go up or down regardless of what the Fed does.

Can't imagine anyone in the real world hopping off to the store the moment he or she hears that interest rates are going to be a quarter of  a percent lower.

 

Also, there is nothing at all new about a president putting  pressure on a Fed chairman.  Many examples in the last 100 years.  "Independence" is a mirage....

2 hours ago, spidermike007 said:

Could this strengthen the dollar? It sure needs some help after suffering under the Trump tariff failures. 

In most cases a drop in the interest rate would lower the value of the dollar against foreign currencies

It's obvious that Trump wants a lower dollar:  it makes it easier to pay off external debt. 

It's similar to inflating away the deficit.

(And if imported goods are replaced by made-in-America substitutes, America "wins".)

Great news for homeowners.

 

Great news for exporters.

 

Trump's economic policies reaping dividends as expected. 

1 hour ago, flexomike said:

In most cases a drop in the interest rate would lower the value of the dollar against foreign currencies

I thought about that for a minute, but I think the presence of the circus clown kind of mitigates the average rule of thumb. 

1 hour ago, JonnyF said:

Great news for homeowners.

 

Great news for exporters.

 

Trump's economic policies reaping dividends as expected. 

Dividends? The main factor in the decision was a lower employment and the risk of further deterioration! 🤣

1 minute ago, candide said:

Dividends? The main factor in the decision was a lower employment and the risk of further deterioration! 🤣

 

Is that what CNN told you? 

8 hours ago, gargamon said:

Trump wanted a 2-3% drop. The markets expected 0.25%.   Some hoped for 0.5%.  The actual cut is 0.20%, so even less than expected.

 

Hardly “slashing“.

 

 

Came across like a whimper.

 

 

 

 

4 minutes ago, JonnyF said:

 

Is that what CNN told you? 

That's what is written in the OP (and what the Fed said) 🤣

2 hours ago, JonnyF said:

Great news for homeowners.

 

Great news for exporters.

 

Trump's economic policies reaping dividends as expected. 

There have been four 0.25% reductions since Labour came to power in the U.K.

 

Great news for homeowners.

 

Great news for exporters.

 

I'm sure you'll join me in congratulating Sir Keir Starmer in his economic policies. 🙂

 

 

 

 

3 minutes ago, Baht Simpson said:

There have been four 0.25% reductions since Labour came to power in the U.K.

 

Great news for homeowners.

 

Great news for exporters.

 

I'm sure you'll join me in congratulating Sir Keir Starmer in his economic policies. 🙂

 

 

 

 

 

The Bank of England did that, not Starmer.

 

5 minutes ago, JonnyF said:

 

The Bank of England did that, not Starmer.

 

And the Fed lowered the U.S. rate. Neither can be overly-influenced by the whims of a governing leader, that's why they resisted Trump's immediate 2-3%. They have to put the country's economy above political posturing. That's why it was peculiar you praised Trump and why I parodied you with Starmer. 

 

 

Stagflation on the horizon just like Argentina. Persistent inflation & poor economic growth. Cutting rates will do little to prevent stagflation. Lots of economic pain for the people next 3+ years. 

6 hours ago, FlorC said:

because the labor market gave us cover

The minor rate cut was due to a slowing labor market that is stalling economic growth.

https://www.aljazeera.com/economy/2025/9/17/

The cut is not good news for the economy!