The Fed's Rate Cut Was Expected. Here's What Not to Expect: Real Help
In a widely anticipated move, the U.S. Federal Reserve on Wednesday decided to lower its target range for the federal funds interest rate by 25 basis points, marking the first rate cut since December 2024. The decision was largely unanimous, except for one dissenting vote from Governor Stephen Miran, who had advocated for a half percentage point reduction.
The rate cut, which brings the new target range to 1.75% to 2%, is seen as a response to growing economic concerns and a slowing global economy. However, analysts warn that this move may not provide the relief investors are seeking. "This rate cut was expected, but it's still unclear what it means for the broader economy," said David Wyss, chief economist at Oxford Economics.
The decision was made by the Federal Open Market Committee (FOMC), which met on September 17, 2025. The FOMC is composed of seven members, including Chairman Jerome Powell, who has been a vocal advocate for monetary policy flexibility. In a press conference following the meeting, Powell emphasized that the rate cut was intended to "support economic growth and job creation."
Despite the rate cut, many economists believe it may not be enough to stimulate the economy. "A quarter point reduction is unlikely to have a significant impact on borrowing costs or consumer spending," said Mark Zandi, chief economist at Moody's Analytics.
The market reaction to the rate cut was muted, with the Dow Jones Industrial Average rising by just 0.5% following the announcement. The yield curve, which had been inverted in recent weeks, also failed to respond positively to the news.
In the background of this decision lies a complex web of economic and political factors. The Federal Reserve has been under pressure from lawmakers and business leaders to take action on interest rates, particularly as the global economy shows signs of slowing down. However, some analysts argue that the Fed's actions are being driven more by politics than economics.
"This rate cut is a response to the growing chorus of criticism from politicians and business leaders," said economist Joseph Brusuelas. "It's not clear whether this move will actually address the underlying economic issues."
As the economy continues to navigate uncertain waters, investors and businesses alike are left wondering what the Fed's next move will be. With inflation concerns still on the radar, some analysts predict that the Fed may need to take further action in the coming months.
In conclusion, while the rate cut was expected, its impact remains unclear. As the economy continues to evolve, one thing is certain: the Federal Reserve's actions will have far-reaching consequences for businesses and investors alike.
Additional Background
The Federal Open Market Committee (FOMC) meets eight times a year to set monetary policy.
The FOMC has been under pressure from lawmakers and business leaders to take action on interest rates.
The global economy is showing signs of slowing down, with many countries experiencing recessionary pressures.
Sources
David Wyss, chief economist at Oxford Economics
Mark Zandi, chief economist at Moody's Analytics
Joseph Brusuelas, economist
Jerome Powell, Chairman of the Federal Reserve
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*Reporting by Forbes.*
