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September 17, 2025US FEDERAL RESERVE MONETARY POLICY At its scheduled Federal Open Market Committee (FOMC) meeting on September 17th, the US Federal Reserve announced that it will cut the target range for the federal funds rate to a range of 4.0% to 4.25%.
The Committee notes that growth of economic activity has moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up. Inflation has moved up and remains somewhat elevated. Uncertainty about the economic outlook remains elevated, and the Committee remains attentive to the risks on both sides of its dual mandate and judges that downside risks to employment have risen.
The Committee also released its updated economic projections. Real GDP is expected to grow 1.6% in 2025, 1.8% in 2026, 1.9% in 2027 and 1.8% in 2028. Inflation (measured by the personal consumer expenditure price index) is projected to grow 3.0% in 2025, 2.6% in 2026, 2.1% in 2027, and 2.0% in 2028. The unemployment rate is expected to be at 4.5% in 2025, 4.4% in 2026, 4.3% in 2027, and 4.2% in 2028.
The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion.
The Committee seeks to achieve maximum employment and returning inflation to 2% over the long run. The Committee will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments to achieve its goals.
The next scheduled FOMC meeting will be held on October 28-29, 2025.
Source: US Federal Reserve, FOMC Press Release; FOMC Summary of Economic Projections(June)
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