Executive Summary: Jerome Powell's Press Conference Following FOMC Meeting (September 17, 2025)
On September 17, 2025, Federal Reserve Chair Jerome Powell held a press conference after the Federal Open Market Committee (FOMC) announced its first interest rate cut of the year, reducing the benchmark federal funds rate by 25 basis points to a target range of 4%–4.25%.
The decision, approved by an 11-1 vote (with one dissenter favoring a larger cut), reflects the Fed's shift toward supporting a softening labor market while monitoring persistent inflation.
Key Economic Context and Rationale
Labor Market Focus:
Powell emphasised rising risks in employment, noting the unemployment rate has edged up to 4.2%—still historically low but signalling slower hiring and potential layoffs. The cut aims to boost hiring and prevent a surge in unemployment amid moderating economic growth in the first half of 2025. Recent data, including weak August payrolls (only 35,000 jobs added), underscored this concern.
Inflation Dynamics:
Core PCE inflation remains above the 2% target but has declined from peaks, which Powell described as "manageable." He highlighted the Fed's dual mandate tension, with the rate adjustment as a "risk management" move rather than a sign of economic strength. Powell also mentioned monitoring consumer credit metrics, such as a 2-point drop in average FICO scores.
Cautious Tone on Impact:
Powell tempered expectations, stating the quarter-point cut "won't make a huge difference" given ongoing challenges in balancing inflation and employment.
Future Outlook and Uncertainties
Policy Path:
The Fed remains data-dependent, with Powell indicating flexibility for future adjustments. Projections suggest possibly two more similar cuts in 2025 if conditions warrant, but he stressed no predetermined path. He noted significant uncertainties, including potential high tariffs, immigration restrictions, and policy changes, admitting "no one knows" the economy's trajectory over the next three years.Market and Broader Implications:
Markets anticipated the cut, leading to mild reactions—Dow slightly up, Nasdaq marginally down. Powell appeared less concerned about reaccelerating inflation, which could support risk assets like stocks and cryptocurrencies in a lower-rate environment. However, his conservative remarks may introduce short-term volatility, particularly if employment data worsens.
Overall, the press conference underscored the Fed's pivot toward employment risks while maintaining vigilance on inflation, signaling a gradual easing cycle amid economic headwinds.