Fed makes first rate cut this year, citing risks to employment

WASHINGTON - The US Federal Reserve on Sept 17 lowered interest rates for the first time in 2025, flagging slower job gains and risks to employment as policymakers face heightened pressure under President Donald Trump.

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The Fed cut the benchmark lending rate by 25 basis points, to a range of between 4 per cent and 4.25 per cent, while pencilling in two more cuts for 2025.

Fed chairman Jerome Powell stressed that the central bank remains “strongly committed” to maintaining its independence from politics, however, when asked about the addition of a key adviser to Mr Trump among its ranks this week.

He added that the Fed was “right to wait and see how tariffs and inflation and the labour market evolved” before lowering rates for the first time in nine months.

Only new Fed governor Stephen Miran - who has been serving in the Trump administration — voted against the Sept 17 decision. He favoured a larger rate reduction of 50 basis points.

The other 11 voting members of the rate-setting Federal Open Market Committee supported the quarter-point cut.

Economics professor Ryan Chahrour from Cornell University said the vote appeared to signal “consolidation” among top Fed officials.

“They want to be clear that they’re not influenced by political considerations, and I think they understand that lots of dissent in multiple directions sends a confusing message to markets,” he told AFP.