U.S. Federal Reserve cuts interest rates for first time this year

September 17, 2025

The Federal Reserve lowered its benchmark interest rate by 25 basis points, bringing the federal funds target range to 4.00 to 4.25 percent. This marks the first rate cut of the year and reflects growing concern over a cooling labour market and persistent economic uncertainty. Job growth has slowed noticeably, and the unemployment rate has ticked up to 4.3 percent. Although inflation remains above the Fed’s 2 percent target, the Committee chose to prioritize employment stability, signalling a shift toward a more supportive monetary stance.

The decision was not unanimous. Governor Stephen Miran dissented, advocating for a deeper 50 basis point cut, citing more urgent risks to economic momentum. The Fed’s updated projections suggest two additional rate cuts may follow before year-end, with one more expected in 2026. GDP growth was revised slightly upward, but unemployment is forecasted to rise further.

Operationally, the Fed adjusted the interest on reserve balances to 4.15 percent and maintained its balance sheet runoff strategy. This means it will continue reducing its holdings of Treasury securities and agency mortgage-backed securities, even as it eases rates. The Committee emphasized that future policy decisions will remain data-driven, guided by developments in inflation, employment, and broader financial conditions.

Disclaimer:

Analyst Certification – The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view (s) expressed by that research analyst in this research report.

Company Disclosure – The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may affect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.

2025-09-17T14:04:27-05:00