The US Federal Reserve held its sixth meeting of 2025 from Tuesday (September 16) to Wednesday (September 17) amid slowing growth in the country’s labor market.
The central bank met analyst expectations by cutting the fed funds rate by 25 basis points to a range of 4 to 4.25 percent. It marks the first cut of 2025, after remaining at a range of 4.25 to 4.5 percent since December 2024.
Despite August consumer price index (CPI) data shows that inflation rose to 2.9 percent from 2.7 percent in July. A weakening labor market became the focus of the Fed’s dual mandate of stable prices and maximum employment.
“There is less evidence for a sustained inflation outbreak, which is why we think it is time to acknowledge that risks to the other mandate have increased and that we should move towards neutral,” said Chairman Jerome Powell.
The most recent US Jobs Report indicates that August saw an increase of only 22,000 new workers, while the unemployment rate rose to 4.3 percent from 4.2 percent in July. In addition, the Bureau of Labor Statistics, which produced the report, announced a downward revision to June’s figures, which showed a loss of 13,000 jobs.
Similarly, the July report, released on August 1, marked a significant weakening of the labor force, bringing the three-month average to just 28,000 new jobs, after growing by 192,000 in the period February to April.
Following that report, US President Donald Trump said fired the head from the Bureau of Labor Statistics, suggesting that jobs data had been “manipulated” to make his administration look bad. Both the slowing US labor market and rising inflation in recent months have been blamed for the consequences of Trump’s tariffs seeping into the economy.
Trump has been critical of the Fed and Powell in particular, saying that they did not move quickly enough to cut interest rates.
Although he cannot unseat Powell, Trump tried to unseat Fed Governor Lisa Cook in August over alleged mortgage fraud stemming from mortgage applications in which she listed two homes as her primary residence. Recent documents have shown this accusations are falseand that Cook listed one of the houses as a vacation property.
On Monday (September 15), an appeals court blocked Cook’s removal from the Fed’s Board of Governors, allowing her to participate in this week’s meeting. Also this week the Senate confirmed Stephen Miran to the board in a 48-47 decision along party lines. He replaces Adriana Kugler, who resigned in August.
Miran is on leave from his position at the White House Council of Economic Advisers, increasing Trump’s influence over the seven-member administration. The appointment process for a new board member normally takes months, but Miran’s appointment took just six weeks, allowing him to participate in this week’s meeting.
Gold prices rose to a record high of US$3,707.34 per ounce shortly after the decision, but quickly fell back to US$3,650. Silver rose to US$42.24 per ounce after the meeting, still trading near a 14-year high.
Stocks were mixed on Wednesday, with the S&P 500 (INDEXSP:INX) losing 0.31 percent to settle at 6,586. Meanwhile, the Nasted-100 (INDXNADS:NDX) lost 1.03 percent to 24,036, and the Dow Jones Industrial Average (INDEXDJX:DJI) gained 0.5 percent to 45,084.
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Securities Disclosure: I, Dean Belder, have no direct investment interest in any company mentioned in this article.
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