Overview

• The Federal Reserve lowered the federal funds rate by 25 basis points to 4.00%–4.25% on September 17, its first move since late 2024.
• The updated dot plot points to two additional 25‑basis‑point reductions this year and a total of about 115 basis points of easing through 2027, while futures markets price a deeper decline by end‑2026.
• Fed projections lifted growth to 1.6% for 2025 and 1.8% for 2026, raised the 2026 inflation estimate to 2.6%, and foresee achieving the 2% goal only in 2028.
• Labor data show strain with unemployment at 4.3% and expected to reach 4.5%, large payroll revisions, and softer consumer expectations in recent surveys.
• Equities have advanced on cheaper‑money hopes with smaller U.S. stocks seen as beneficiaries, as a lone vote by Governor Stephen Miran for a 50‑basis‑point cut intensifies scrutiny of Fed independence.