Fed Cuts Interest Rate For First Time Since December

**Fed Cuts Interest Rate For First Time Since December**
By
Diccon Hyatt
Published September 17, 2025
02:06 PM EDT
The federal funds rate influences a number of borrowing costs.
Kevin Dietsch / Getty Images
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Key Takeaways
* The Federal Reserve's policy committee voted to reduce the central bank's key interest rate by a quarter of a percentage point to a range of 4% to 4.25%, the lowest since December 2022.
* Fed officials have grown more worried that tariffs will spark a wave of unemployment than that they will fuel inflation, at least for the time being.
* The vote was divided, reflecting the Fed's dilemma: lower interest rates could boost hiring, but a higher rate would help keep inflation down.
The Federal Reserve has cut its key interest rate, reducing borrowing costs in an effort to boost hiring and prevent a surge of unemployment. The central bank's policy committee voted Wednesday to lower the fed funds rate by a quarter-point to a range of 4% to 4.25%, the first cut since December and its lowest level since December 2022.1 Fed officials predicted two more such reductions are likely for the remainder of the year, to a range of 3.5% to 3.75%, according to a set of quarterly economic projections released alongside the interest rate decision.2 That was one more quarter-point cut than officials expected in June, the last time they made economic projections. The Fed has held the rate steady so far this year to push down inflation, which is still running over the Fed's target of a 2% annual rate. However, officials have recently grown more concerned that President Donald Trump's trade wars are slowing down the economy and risk causing a wave of unemployment. The fed funds rate sets the rate at which banks lend money to one another, and influences borrowing costs on credit cards, car loans, and many other kinds of debt. "The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen," The committee said in a statement. The vote of the 12-member committee was split, with 11 voting for the quarter-point cut and one, the newly appointed Stephen Miran, voting for a larger half-point reduction. The divided vote reflects the difficult decisions the Fed faces as it tries to fulfill its dual mandate to keep inflation low and employment high. The Fed could keep interest rates higher for longer to discourage spending and fight inflation, or lower them to boost the economy and encourage hiring, but it can't do both simultaneously. Fed officials have said tariffs pose risks to both sides of the mandate. The independent central bank is also under an unusually high political pressure. Trump has demanded that the central bank, independent of direct control from the White House, cut rates by three percentage points or more.
He has also taken steps to control of the Fed, attempting to fire Fed Governor Lisa Cook, a member of the 12-person interest rate committee, to replace her with his own nominee. That move was temporarily blocked by the courts, allowing her to participate in this week's two-day meeting. Cook voted with the majority to lower the rate by a quarter-point. **Markets News, Sep. 17, 2025: Stocks End Mixed After Federal Reserve Cuts Interest Rates; Dow Rises, Nasdaq, S&P 500 Slip**
By
Aaron Rennie
Full Bio
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A former Senior Publishing Editor on the Dow Jones Newswires team at The Wall Street Journal, Aaron earned a Bachelor's degree in Economics from the University of Michigan and a Master's in Journalism from Columbia University.
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Updated September 17, 2025
06:14 PM EDT
The Federal Reserve cut its benchmark interest rate by a quarter percentage point Wednesday, matching trader expectations.
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Major stock indexes ended mixed Wednesday after the Federal Reserve trimmed interest rates by a quarter percentage point and signaled further cuts ahead.
The blue-chip Dow Jones Industrial Average ended up 0.6% after touching an intraday record-high 46261. The tech-heavy Nasdaq ended 0.3% lower, while the benchmark S&P 500 slipped 0.1%. The 10-year Treasury yield, which affects borrowing costs on a variety of consumer and commercial loans, was at 4.09%, up from 4.03% at Tuesday's close.
The central bank's policy committee voted to lower the fed funds rate to a range of 4% to 4.25%, its first cut since December. All voting members backed the decision except recently confirmed Stephen Miran, who voted for a 50-basis-point cut. Fed officials narrowly predicted two more quarter-point reductions are likely for this year, according to a set of quarterly economic projections released alongside the rate decision.
Investors may have hoped for more clarity about the likelihood of further rate cuts in 2025. Today revealed a rough split between members who believe two additional cuts are called for in 2025 and those who expect one, or none, to be appropriate. Balancing the Fed's mandates of managing prices and employment, Federal Reserve chair Jay Powell said at a press conference, is "challenging."
Gold futures pulled back from all-time highs and fell 0.8% to below $3,700 an ounce at 4 p.m. ET. West Texas Intermediate futures, the U.S. crude oil benchmark, were nearly 1% lower at below $64 a barrel. Bitcoin was little changed at $115,800. The U.S. dollar index, which tracks the value of the greenback against a basket of foreign currencies, was up 0.3% at 96.95 after hitting its lowest level since early 2022 this morning.
In corporate news, Nvidia (NVDA) shares closed down 2.7% following a report that China has banned its biggest tech companies from buying artificial intelligence chips from the American firm. Fellow tech giant Broadcom (AVGO) ended down 3.8%, weighing on the Nasdaq.
Also, Workday (WDAY) stock ended more than 7% higher as Elliott Investment Management said it had taken a $2 billion stake in the HR software firm; shares of Meta Platforms (META) slipped 0.4% ahead of a two-day developers conference where the Facebook and Instagram parent is expected to showcase its latest AI-powered glasses; and StubHub shares ended down 5.7% after opening up nearly 8% in their debut on the New York Stock Exchange under the ticker "STUB."= Rewrite all the above. write as if the article is talking to the. reader. add some humor and value proposition