WASHINGTON, D.C.—The Federal Reserve Board on Wednesday, September 17, cut its benchmark overnight lending rate by 0.25 percentage points to a range of 4%-4.25%, in an 11-1 vote. The move, driven by growing U.S. labor market concerns, also signals two additional cuts before year-end.
“The Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4‑1/4 percent,” the Feds released in a statement.
The Federal Reserve notes that U.S. economic growth slowed in the first half of 2025, with job gains moderating, unemployment ticking up, and inflation rising to elevated levels. Amid heightened uncertainty and increased downside risks to employment, the Board lowered the rate to support maximum employment and 2% inflation goals.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; Jeffrey R. Schmid; and Christopher J. Waller. Voting against the 0.25 percent rate cut was Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting.
Today’s vote comes a day after a split three-judge panel of the U.S. Court of Appeals for the D.C. Circuit ruled the firing of Lisa Cook, a Federal Reserve Governor, by President Donald J Trump in August 2025, illegal, affirming a lower court’s decision. The majority held that Cook was entitled to due process before removal, rejecting Trump’s claims of incompetence. The Trump administration can appeal their decision to the Supreme Court.
Cook was fired By Trump citing an investigation into pre-nomination mortgage fraud. Critics called the move politically motivated, as Cook was a President Joe Biden appointee and dovish on rates. Cook did participate in today’s vote.
How does a Fed cut impact me?
A Federal Reserve rate cut lowers the benchmark interest rate for financial institutions. The everyday person can expect relief on variable-rate debts like credit cards, auto loans, and adjustable-rate mortgages, as lenders pass along the lower rates. Fixed-rate loans (e.g., existing mortgages) won’t change, but new ones could become more affordable.
If you are looking to purchase or refinance a home, 30-year fixed mortgage rates, already hovering around 6.5%, might dip slightly in the coming weeks, making homebuying or refinancing easier for first-timers or those upgrading.
However, savings accounts, CDs, and money market funds will yield less returns—potentially dropping from 4-5% to closer to 3-4% soon. If you’re relying on interest income, this could squeeze your budget.
For the broader economy, businesses may be encouraged to borrow and invest, which would lead to more hiring and wage growth, helping if you’re job hunting or want a better paying career.
Author: Mario Lotmore
