Federal Reserve cuts rates by modest 25bp, one member voted for 50bp

17th Sep 2025 20:14

(Sharecast News) - The US central bank cut rates as expected and signalled that economic agents could expect further reductions over the next two years.

However, in his post-meeting press conference, Federal President, Jerome Powell, described Wednesday's rate reduction as "risk management", explaining that employment had now "clearly" worsened.

Inflation nonetheless remained "somewhat elevated".

Powell also noted how there were still seven top central bank officials who anticipated no further rate cuts before 2025 was out, as could be gleaned from the Summary of Economic Projections.

Policymakers cut the target range for the Fed funds rate by 25 basis points to 4.0-4.25%.

And the median projections that they submitted entailed two more 25bp cuts by the end of 2025 for a median end-year projection of 3.6%.

One more rate cut was anticipated in 2026 and 2027, respectively.

There wasn't widespread support for a 50bp cut on Tuesday, Powell added.

That comment was likely in response to the decision by recently appointed Federal Reserve board member Stephen Miran to vote for a 50bp cut, unlike everyone else, who supported the 25bp move.

Reacting to the results of the meeting and Powell's initial comments, Kathleen Brooks, research director at XTB, said: "The fairly mild reaction to the Fed meeting is down to a few reasons.

"Firstly, the Fed has essentially ratified the market view that there is a strong likelihood of two further rate cuts this year, secondly, the latest Dot Plot suggests that the Fed will embark on the next stage of its rate cutting cycle, and thirdly, traders may end up dismissing this meeting altogether since their will be a large turnover of FOMC members in the coming months."