Federal Reserve Cuts Interest Rates Amid Job Market Concerns

Thu Sep 18 2025 10:56:20 GMT+0300 (Eastern European Summer Time)

The Federal Reserve has announced a cut in interest rates, the first since December, but has issued caution over a weakening job market. This move, supported by most committee members, is seen as a response to declining employment figures.

The Federal Reserve reduced its key lending rate by 0.25 percentage points, marking its first cut in months amidst growing worries about a stalling labor market. Jerome Powell, the Fed Chair, indicated that while unemployment remains low, recent job growth has been lackluster. The decision reflects a shift in focus from inflation to employment, as the central bank aims to stimulate economic activity. President Trump's influence in the Fed's decision-making has also sparked debate about the independence of the central bank.

It's finally happening. After months of economic debate and mounting attacks from US President Donald Trump, the US central bank cut interest rates on Wednesday.

The Federal Reserve said it was lowering the target for its key lending rate by 0.25 percentage points. That will put it in a range of 4% to 4.25% - the lowest level since late 2022.

The move - the bank's first rate cut since last December - is expected to kick off a series of additional reductions in the months ahead, which should help bring down borrowing costs across the US.

However, today's move carries a warning about the economy, reflecting increased consensus at the Fed that a stalling job market needs a boost in the form of lower interest rates. Unemployment is still low but we're seeing downside risks, Federal Reserve chairman Jerome Powell said at a news conference after the announcement.

This cut was backed by 11 of the 12 voting members on the Fed's committee. Stephen Miran, a member who is temporarily serving as lead economic advisor to Trump, called for a larger 0.5 percentage point cut.

Notably, Powell's statement that the Fed faces a challenge of policy-making comes as inflation remains above the Fed's target, indicating a cautious balancing act between stimulating the economy and controlling inflation.

The Fed has noted concerning trends in the labor market, with job gains slowing in recent months. Sarah House, a senior economist at Wells Fargo, emphasized that the decision reflects a deteriorating jobs market, urging that the Fed must act quickly before further job losses occur.

This interest rate cut, while aimed at addressing employment concerns, has not dispelled the tension between the Federal Reserve's independence and presidential influence. President Trump has pressured the Fed for lower rates and criticized Powell's management of interest rates. The landscape continues to evolve as analysts project additional cuts may come if economic conditions do not improve.