Overview

• The Federal Open Market Committee lowered the federal funds rate to 4.00%–4.25%, its first cut since December 2024.
• New projections point to as much as 50 basis points of additional easing by year-end, with the median year-end rate near 3.6%.
• The vote was 11–1, with newly appointed Governor Stephen Miran dissenting for a larger 50-basis-point reduction.
• Officials cited softer labor data and a 911,000 downward revision to payrolls as inflation held at 2.9% year over year in August, with tariffs lifting goods prices.
• Markets reacted cautiously as Powell emphasized a meeting-by-meeting path, and investors parsed a wide split in the Fed’s rate outlook.