Fed Cuts Rates as Expected

2025-09-17 18:01 By Joana Taborda 1 min. read

The Federal Reserve cut the federal funds rate by 25bps in September 2025, bringing it to the 4.00%–4.25% range, in line with expectations.

It is the first reduction in borrowing costs since December.

Newly appointed Governor Stephen Miran stood alone in voting against the 25bps move, favoring a half-point cut instead.

The central bank also released new economic projections.

The Fed expects to lower rates by another 50bps by the end of 2025, and a quarter point in 2026, slightly more than expected in June.

GDP growth projections were revised higher for 2025 (1.6% vs 1.4% seen in the June projection), 2026 (1.8% vs 1.6%) and 2027 (1.9% vs 1.8%).

PCE inflation is seen at 3% for this year, the same as in June but the projection was revised higher for 2026 (2.6% vs 2.4%).

Core PCE projection was also left at 3.1% for 2025 but was revised up for 2026 to 2.6% from 2.4%.

The unemployment rate continues to be expected at 4.5% for 2025 but was revised lower to 4.4% from 4.5% for next year.



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