💬Summary of the Federal Reserve 🇺🇸 interest rate meeting and Powell's speech on September 18, 2025, early morning
At 2:00 AM Beijing time on September 18, 2025 (2:00 PM ET on September 17), the Federal Reserve concluded its two-day Federal Open Market Committee (FOMC) monetary policy meeting, announcing a 25 basis point reduction in the target range for the federal funds rate to 4.00%-4.25%.
This is the Federal Reserve's first rate cut since December 2024, in line with market expectations (the CME Fed Watch Tool showed a 96% probability of a 25 basis point rate cut). Thirty minutes after the meeting, Federal Reserve Chairman Jerome Powell held a press conference to elaborate on the policy stance.
The following is a summary of key points:
1️⃣Interest rate cut decision and voting situation
📉Magnitude of the cut: 25 basis points, adjusting the target range from 4.25%-4.50% to 4.00%-4.25%. This is a signal that the Federal Reserve is restarting its rate cut cycle, aimed at addressing the cooling labor market and falling inflation, but the magnitude is moderate to avoid excessive easing.
🎫Voting: 11 votes in favor, 1 vote against. Newly appointed Federal Reserve Governor Stephen Milan cast the only dissenting vote, arguing for a 50 basis point rate cut to provide stronger support for the labor market. This reflects divisions within the Federal Reserve, with rising employment risks becoming a policy focus.
🧩Dot plot update: Officials expect two more rate cuts within 2025 (a total of 75 basis points), only one rate cut in 2026, and another cut in 2027. The overall path is more dovish, but emphasizes data dependence (especially labor market and inflation data).
2️⃣Key points from Powell's press conference
Economic assessment: The U.S. unemployment rate remains low but has risen slightly (August data was weak, non-farm payrolls fell sharply), and inflation has risen recently but remains slightly above the 2% target. Powell emphasized that the downside risks to employment have increased ("employment risks are skewed to the downside"), and inflation risks are to the upside, but most inflation expectations indicators will meet the 2% target next year. Tariff policies (Trump administration influence) may drive short-term price increases, but are expected to be temporary.
Policy stance: The Federal Reserve's policy is "flexible," and the short-term rate cut window has opened, but the future path is highly data-dependent. Powell reiterated the Federal Reserve's "firm commitment" to maintaining independence and not being influenced by politics (such as responding to White House pressure and questions about Milan joining the Federal Reserve). He managed market expectations of excessive easing, saying that if inflation rebounds, policies will be readjusted (slightly hawkish tone).
Other signals: Labor market weakness has become a major concern, and inflation is no longer the main obstacle. Powell did not mention specific details of the next meeting, but hinted at "preemptive" easing to cope with downward economic pressure.
3️⃣Market reaction
Immediate reaction: U.S. stock indexes rose and then fell, closing mixed (tech stocks under pressure); the dollar index plunged, and the RMB rose; gold prices fell from high levels. Cryptocurrencies such as $ETH briefly broke through $4,600.00, but the increase was without volume, and market sentiment was optimistic but cautious.
Global impact: Chinese assets rose sharply (such as A-shares), and global funds may flow to emerging markets. Wall Street institutions (such as Goldman Sachs) predict three rate cuts for the year, but if employment deteriorates, a 50 basis point rate cut next time cannot be ruled out.
4️⃣Background and suspense
Before this meeting, the market focus included the magnitude of the rate cut (25 vs 50 basis points) and the hawkish/dovish orientation of the dot plot. Recent speeches by Federal Reserve officials (such as Vice Chairman Bowman supporting three rate cuts this year) strengthened rate cut expectations, but Powell "remained silent" to avoid prematurely affecting the market.
Future focus: October meeting data (employment, inflation), and the lasting impact of tariff policies on inflation. The Federal Reserve emphasized a "wait-and-see period," and policies will be flexibly adjusted based on economic data.
Overall, this rate cut released an easing signal, but Powell's speech was more cautious (hawkish elements), aimed at balancing employment support and inflation vigilance, and avoiding the market over-interpreting it as aggressive easing.
Exactly Protocol