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  3. Fed Cuts Interest Rates to 4.00%-4.25%: September 17, 2025 FOMC Decision

Fed Cuts Interest Rates to 4.00%-4.25%: September 17, 2025 FOMC Decision

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The Federal Reserve cut interest rates by 25 basis points to 4.00%–4.25% at today's September 17, 2025 FOMC meeting. This is the first rate reduction of 2025 and the first since the Committee lowered the target range to 4.25%–4.50% on December 18, 2024. Today’s decision by Chair Jerome Powell and the FOMC affects borrowing costs across the economy—including some mortgages and savings products—while the Committee responds to cooling labor conditions and moderating inflation.

Table of Contents

Fed Cuts Interest Rates to 4.00%-4.25%: September 17, 2025 FOMC Decision

Fed Rate Decision September 17, 2025

The Federal Open Market Committee (FOMC) announced its September 2025 decision at 2:00 p.m. ET, cutting the federal funds rate by 0.25 percentage points to a new target range of 4.00%–4.25%. This follows the prior reduction on December 18, 2024 to 4.25%–4.50% (Fed statement). Heading into today’s meeting, futures pricing indicated high odds of a quarter-point cut (CME FedWatch).

5 Immediate Takeaways from Today’s Fed Decision

First rate cut since December 18, 2024 (when the target range was set to 4.25%–4.50%) and the first reduction in 2025.

Why Did the Fed Cut Interest Rates Today?

Labor Market: Unemployment & Payrolls

The U.S. unemployment rate stood at 4.2% in July 2025 (BLS Employment Situation, July). August data show a further soft patch, with total nonfarm payrolls up +22,000 and unemployment at 4.3% (BLS Employment Situation, August (HTML), PDF).

A commonly referenced signal, the Sahm Rule—which flags elevated recession risk when the 3-month average unemployment rate rises 0.5 percentage points above its 12-month low—is being monitored by policymakers alongside a broader labor dashboard (Background explainer).

Separately, the Bureau of Labor Statistics’ preliminary benchmark revision indicates payrolls were overcounted by 911,000 through March 2025, pointing to a cooler labor market than previously understood (BLS CES Preliminary Benchmark, Sept 9, 2025 (PDF)).

Real-Economy Notes

Large employers have taken a more cautious stance on hiring in recent months, while manufacturing employment has edged lower compared with earlier in the year (see BLS industry tables linked within the monthly Employment Situation).

Latest Inflation Data

Headline inflation has moderated compared with 2023: the CPI rose 2.9% year over year in August 2025 (BLS CPI News Release, Aug; CPI Home). Core inflation remains above 2%, and the Fed continues to assess progress toward its price-stability goal.

GDP Growth Context

Recent BEA estimates show a mixed growth profile in 2025: Q1 –0.5% (annualized) and Q2 +3.3% (second estimate) (BEA news release, PDF). The Atlanta Fed’s GDPNow tracking estimate for Q3 2025 recently pointed to growth around ~3.1% as of September 10 (GDPNow). GDPNow is a model-based nowcast and is updated frequently.

Sectors to Watch After a Fed Rate Cut

Historically, sector performance after the start of an easing cycle has varied by macro backdrop. Lower policy rates can improve financing conditions and discount rates, which can favor some rate-sensitive areas (e.g., parts of real estate, small caps, and certain growth industries). However, outcomes differ across cycles and depend on the growth/inflation mix and credit conditions. This section will be updated post-decision with performance attribution once the market response is observable.

How a Fed Rate Cut Relates to Mortgage Rates

Mortgage rates do not move in lockstep with the fed funds rate. They typically track the 10-year Treasury yield plus a credit spread. As of the week ended September 11, 2025, the average 30-year fixed mortgage rate was roughly ~6.35% nationally (Freddie Mac PMMS, Freddie Mac news release). If longer-term yields and spreads decline further, mortgage rates can drift lower over time, but the path is data-dependent and can be uneven.

Impact on Savings and Deposit Rates

Deposit and high-yield savings rates may adjust after a policy rate change, though timing and magnitude vary by institution. Savers should review account terms and disclosures from their bank or credit union to understand how and when rates may change. Certificates of deposit (CDs) also reflect market conditions and institutional pricing; consumers can compare offers but should evaluate features, early-withdrawal penalties, and their own liquidity needs.

Next Fed Meeting and What to Watch

Remaining 2025 FOMC Meetings

Meeting Dates What to Watch
Oct 28–29, 2025 September jobs report, September CPI/PCE, Q3 earnings season developments
Dec 9–10, 2025 Fall labor and inflation data, growth tracking into Q4, updated SEP (if scheduled)

Source: Federal Reserve FOMC calendars and tentative 2025 schedule.

Key Economic Data to Watch

Upcoming releases that typically matter for policy:

  1. October 3: September Employment Situation (nonfarm payrolls & unemployment rate) — BLS
  2. Mid-October: September CPI and PPI — BLS CPI
  3. Late October: Q3 GDP advance estimate — BEA
  4. Early November: October Employment Situation — BLS

Rate-Cut Cycles: Historical Context

Market performance after “first cuts” has been mixed across history. Episodes associated with soft-landing dynamics have seen stronger equity outcomes, while cuts amid or into recession have produced more varied results. Because each cycle’s growth and inflation profile differs, past performance should not be used as a prediction for the current cycle.

Jerome Powell Press Conference: Highlights

Watch here: Fed Live Broadcast.

Frequently Asked Questions – Fed Rate Cut September 17, 2025

When is the next Fed meeting in 2025?

The next scheduled meetings are October 28–29, 2025 and December 9–10, 2025. Policy statements are typically released at 2:00 p.m. ET on the second day, with a press conference to follow (Fed calendars).

How much did the Fed cut rates today?

The Federal Reserve cut the target range for the federal funds rate by 25 basis points to 4.00%–4.25% (official statement).

Will mortgage rates drop after today’s Fed rate cut?

They can, but not necessarily because of the cut alone. Mortgage rates depend more on the 10-year Treasury yield and market credit spreads. If those fall, mortgage rates may drift lower; if they rise, mortgage rates may not decline despite a Fed cut (Freddie Mac PMMS).

What happens to my savings account after a Fed cut?

Financial institutions often review deposit rates after policy changes, but adjustments vary by bank and account type. Check your provider’s terms and any notices for changes to yields and fees.

Which stocks benefit most from rate cuts?

There is no uniform outcome. Some rate-sensitive areas can see support when discount rates fall, but sector leadership depends on the growth and inflation backdrop, earnings trends, and credit conditions.

Why did the Fed decide to cut rates now?

Key factors include a cooling labor market (higher unemployment, slower payroll growth), inflation moderating versus 2023, and an assessment that slightly less-restrictive policy is consistent with the Fed’s dual mandate (BLS Employment Situation; BLS CPI; BEA GDP).

Where can I watch the Fed announcement and Powell’s speech?

The Federal Reserve posts policy statements at 2:00 p.m. ET and streams the press conference at 2:30 p.m. ET on its official website (Fed Live Broadcast).

Is this the start of a recession?

There is no official recession determination at this time. Recession calls are made by the NBER with a lag. Current indicators send mixed signals; incoming data will inform the outlook.

Should I change my investment portfolio?

This article is general information, not personalized advice. Portfolio decisions depend on individual objectives, time horizon, and risk tolerance. Consider consulting a qualified financial professional for guidance tailored to your situation.

Global Market Implications

U.S. rate moves can influence global financial conditions through the dollar, Treasury yields, and risk sentiment. We will add cross-market observations as post-decision data develop across regions and major asset classes.

Important Disclaimer: This article provides factual reporting and general market context regarding the Federal Reserve’s September 17, 2025 policy decision. It is for informational purposes only and does not constitute financial, investment, trading, or tax advice. Interest-rate changes can affect individuals and investments differently. Past performance during prior rate cycles does not predict or guarantee future results. All investments involve risk, including possible loss of principal. Readers should conduct independent research and consider consulting qualified financial, tax, or legal professionals before making any financial decisions. StockTitan aggregates market data and news and does not provide personalized recommendations, portfolio management, or financial planning services.

Methodology & Sources