Why did the Fed resume rate cuts in September 2025?
The Fed had cut three times in late 2024, but its December projections anticipated a much slower 2025 easing path and the committee then held rates through July. The turning point was a visible split inside the committee, with two governors dissenting for cuts, followed by Powell’s view that the balance of risks had shifted. In September, the FOMC said downside risks to employment had risen and resumed easing; it then delivered two further quarter-point cuts by December.
Trace the chain
The 2024 easing
- 1Easing cycle opensAnnouncement
The Fed starts cutting with a half-point move to 4.75 to 5 percent
After holding at 5.25 to 5.5 percent for fourteen months, the FOMC opened its easing cycle with a 50 basis point cut, saying it had gained greater confidence that inflation was moving sustainably toward 2 percent while job gains had slowed. Governor Michelle Bowman dissented in favour of a quarter point, the first dissent by a governor since 2005. Mortgage rates had already fallen to about 6.1 percent in anticipation.
Federal Reserve Board ·
In light of the progress on inflation and the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent.
Why it matters here. The half-point September reduction was followed by another quarter-point cut at the November meeting.
The Fed's Rate Path: From the 2024 Cuts to Warsh's First Meetings
- 2November cutAnnouncement
FOMC lowers the federal-funds target range to 4.5 to 4.75 percent
The FOMC lowered the target range for the federal funds rate by 25 basis points to 4.5 to 4.75 percent. The Federal Reserve published the statement on November 7, 2024.
Federal Reserve ·
In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/2 to 4-3/4 percent.
Why it matters here. The November reduction carried the easing cycle into a third consecutive cut in December.
The Fed's Rate Path: From the 2024 Cuts to Warsh's First Meetings
- 3Slower 2025 outlookAnnouncement
Third cut of 2024 takes the range to 4.25 to 4.5 percent; projections pencil in only two cuts for 2025
The FOMC cut by a quarter point for the third consecutive meeting, but the new projections showed just two cuts in 2025 instead of four and Cleveland's Beth Hammack dissented for no change. Markets fell sharply and the ten-year yield rose; the range would then stay unchanged for nine months as tariffs clouded the inflation outlook.
Federal Reserve Board ·
In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/4 to 4-1/2 percent.
Why it matters here. With projections reduced to two 2025 cuts rather than four, the committee went on to hold the range through its fifth straight hold in July.
The Fed's Rate Path: From the 2024 Cuts to Warsh's First Meetings
The pivot
- 4July hold divides governorsAnnouncement
Fifth straight hold at 4.25 to 4.5 percent, with two governors dissenting for a cut
Governors Michelle Bowman and Christopher Waller voted for a quarter-point cut, the first time two governors had dissented together since 1993, as President Trump escalated demands for lower rates and named Powell's replacement a running theme. The statement said growth had moderated, the labour market remained solid and inflation was somewhat elevated. Trump had toured the Fed's renovation site the week before.
Federal Reserve Board ·
Voting against this action were Michelle W. Bowman and Christopher J. Waller, who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting.
Why it matters here. The two dissents for a cut foreshadowed Powell’s August signal that the balance of risks had shifted.
The Fed's Rate Path: From the 2024 Cuts to Warsh's First Meetings
- 5Powell signals adjustmentAnnouncement
Jackson Hole: Powell says the shifting balance of risks may warrant adjusting policy
In his final Jackson Hole speech as chair Powell said the labour market was in a curious kind of balance with both supply and demand for workers slowing, that tariff effects on prices were now visible, and that with policy restrictive the baseline outlook and the shifting balance of risks might warrant a change in stance. The Fed also released its revised framework, dropping the 2020 average inflation targeting language. Markets took it as a signal for a September cut.
Federal Reserve Board ·
Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.
Why it matters here. Powell’s Jackson Hole signal was followed by the September decision to resume easing in response to downside risks to employment.
The Fed's Rate Path: From the 2024 Cuts to Warsh's First Meetings
The resumed cuts
- 6September easing resumesAnnouncement
First cut of 2025: a quarter point to 4 to 4.25 percent, citing downside risks to employment
The FOMC resumed easing after nine months, saying downside risks to employment had risen, and the projections showed two more cuts in 2025. Miran dissented on his first day in favour of a half-point cut; Bowman and Waller, who had dissented in July, voted with the majority. Freddie Mac's 30-year mortgage rate fell to 6.26 percent that week, the lowest in almost a year.
Federal Reserve Board ·
In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4‑1/4 percent.
Why it matters here. The September projections showed two more cuts in 2025, and the committee made the first of them in October.
The Fed's Rate Path: From the 2024 Cuts to Warsh's First Meetings
- 7October cut and runoff endAnnouncement
Second cut to 3.75 to 4 percent; balance-sheet runoff to end December 1; dissents in both directions
With the government shut down and most official data suspended, the committee cut again and announced it would stop shrinking its securities holdings on December 1. Miran again wanted a half point while Kansas City's Jeffrey Schmid wanted no change. Powell said a December cut was far from a foregone conclusion.
Federal Reserve Board ·
The Committee decided to conclude the reduction of its aggregate securities holdings on December 1.
Why it matters here. After cutting again and announcing that balance-sheet runoff would end on December 1, the committee delivered its third consecutive cut in December.
The Fed's Rate Path: From the 2024 Cuts to Warsh's First Meetings
- 8December cut completes runAnnouncement
Third cut of the year to 3.5 to 3.75 percent, over three dissents
The FOMC delivered a third consecutive quarter-point cut, taking the range 75 basis points below its September level. Miran dissented for a larger cut while Austan Goolsbee and Jeffrey Schmid preferred to hold, the most dissents at a meeting since 2019. The projections showed only one cut in 2026, and this was the last change in the target range for at least the following nine months.
Federal Reserve Board ·
Voting against this action were Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting; and Austan D. Goolsbee and Jeffrey R. Schmid, who preferred…
Why it matters here. This third consecutive quarter-point cut completed the 75-basis-point easing from the September level and confirmed that the September resumption was followed by two further cuts.
The Fed's Rate Path: From the 2024 Cuts to Warsh's First Meetings
Changes to this chain
- Proposal #30 accepted (verify:v1): why of step 8 -> This third consecutive quarter-point cut completed the 75-basis-point easing from the September level and confirmed that the September resumption was followed by two further cuts.
Timelines in this chain
- The Fed's Rate Path: From the 2024 Cuts to Warsh's First Meetings
- Social Security's Next Raise: From the 2.5% COLA to the 2027 Announcement
- Record Beef Prices: The Smallest Herd Since 1951, the Packer Probe and the Import Fix
- IEEPA Tariff Refunds: From the Supreme Court Ruling to the Console Lawsuits
A chain is written by the editor from entries already published on the timelines above, each of which was read against its source before publication. The chain changes when those entries do. Data and terms.