September 17, 2025
July 30, 2025
Jerome H. Powell
September 17, 2025 FOMC Statement
FOMC statement
Federal Reserve issues FOMC statement
For release at 2:00 p.m. EDT
Although swings in net exports continue to affect the data, recent Recent indicators suggest that growth of economic activity moderated in the first half of the year. The Job gains have slowed, and the unemployment rate has edged up but remains low, and labor market conditions remain solid. low. Inflation has moved up and remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate. mandate and judges that downside risks to employment have risen.
In support of its goals, goals and in light of the shift in the balance of risks, the Committee decided to maintain lower the target range for the federal funds rate at 4-1/4 by 1/4 percentage point to 4-1/2 4 to 4‑1/4 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Jeffrey R. Schmid. Schmid; and Christopher J. Waller. Voting against this action were Michelle W. Bowman and Christopher J. Waller, was Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/4 1/2 percentage point at this meeting. Absent and not voting was Adriana D. Kugler.
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Implementation Note issued July 30, September 17, 2025
Our summary
What changed
- The FOMC lowered the federal funds rate target range by 1/4 percentage point to 4 to 4-1/4 percent, citing a shift in the balance of risks.
- The statement now says job gains have slowed and the unemployment rate has edged up but remains low, replacing the prior language that the unemployment rate remains low and labor market conditions remain solid.
- Inflation language changed from 'somewhat elevated' to 'has moved up and remains somewhat elevated.'
- The FOMC added that it judges downside risks to employment have risen, a new explicit risk assessment.
- The vote was 10-1, with Stephen I. Miran dissenting in favor of a 1/2 percentage point cut; Michelle Bowman and Christopher Waller now voted with the majority, and Adriana Kugler was no longer absent.
Implications
The rate cut and the new language on downside employment risks signal a shift toward prioritizing labor market support, even as inflation has moved up.
The dissent for a larger cut suggests internal debate about the pace of easing, but the majority's action indicates a measured approach to adjusting policy in response to the evolving risk balance.
Summary generated automatically from the statements. Not investment advice.
Projections
| 2025 | 2026 | 2027 | 2028 | Longer run | |
|---|---|---|---|---|---|
| Real GDP growth | 1.6 was 1.4 | 1.8 was 1.6 | 1.9 was 1.8 | 1.8 | 1.8 |
| Unemployment rate | 4.5 | 4.4 was 4.5 | 4.3 was 4.4 | 4.2 | 4.2 |
| PCE inflation | 3.0 | 2.6 was 2.4 | 2.1 | 2.0 | 2.0 |
| Core PCE inflation | 3.1 | 2.6 was 2.4 | 2.1 | 2.0 | |
| Federal funds rate | 3.6 was 3.9 | 3.4 was 3.6 | 3.1 was 3.4 | 3.1 | 3.0 |
Median projections of FOMC participants; previous: June.
Each dot is one participant's projection of the federal funds rate (%) at the end of each year and in the longer run.
September June median June median
Scroll the chart sideways for the later years.
Implementation Note
The settings that put the decision into effect: the interest rate paid on reserves, the FOMC's instructions to the New York Fed's trading desk, and the discount rate. Changes are marked the same way as in the statement.
- The Board of Governors of the Federal Reserve System voted
unanimouslytomaintainlower the interest rate paid on reserve balancesat 4.4to 4.15 percent, effectiveJuly 31,September 18, 2025. - As part of its policy decision, the Federal Open Market Committee voted to direct the Open Market Desk at the Federal Reserve Bank of New York, until instructed otherwise, to execute transactions in the System Open Market Account in accordance with the following domestic policy directive: "Effective
July 31,September 18, 2025, the Federal Open Market Committee directs the Desk to: - Undertake open market operations as necessary to maintain the federal funds rate in a target range of
4-1/44 to4‑1/24-1/4 percent. - Conduct standing overnight repurchase agreement operations with a minimum bid rate of
4.54.25 percent and with an aggregate operation limit of $500 billion. - Conduct standing overnight reverse repurchase agreement operations at an offering rate of
4.254 percent and with aper-counterpartyper‑counterparty limit of $160 billion per day. - Roll over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing in each calendar month that exceeds a cap of $5 billion per month. Redeem Treasury coupon securities up to this monthly cap and Treasury bills to the extent that coupon principal payments are less than the monthly cap.
- Reinvest the amount of principal payments from the Federal Reserve's holdings of agency debt and agency mortgage‑backed securities (MBS) received in each calendar month that exceeds a cap of $35 billion per month into Treasury securities to roughly match the maturity composition of Treasury securities outstanding.
- Allow modest deviations from stated amounts for reinvestments, if needed for operational reasons."
- In a related action, the Board of Governors of the Federal Reserve System voted
unanimouslyto approve a 1/4 percentage point decrease in theestablishment of theprimary credit rateatto 4.25 percent, effective September 18, 2025. In taking this action, theexisting levelBoard approved requests to establish that rate submitted by the Boards of4.5 percent.Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Richmond, Atlanta, Chicago, Minneapolis, Kansas City, Dallas, and San Francisco.
Press conference
September 17, 2025, 2:30 p.m. ET · Read the transcript
What Powell said that the statement didn't
- The chair said GDP rose at a pace of around 1½ percent in the first half of the year, down from 2.5 percent last year, with the moderation largely reflecting a slowdown in consumer spending.
- The chair said payroll job gains slowed to a pace of just 29,000 per month over the past three months, and that a good part of the slowing likely reflects a decline in labor force growth due to lower immigration and lower labor force participation.
- The chair said estimates based on the consumer price index indicate total PCE prices rose 2.7 percent over the 12 months ending in August and core PCE prices rose 2.9 percent, with inflation for goods picking up while disinflation continues for services.
- The chair said the median SEP projection for the federal funds rate is 3.6 percent at the end of this year, 3.4 percent at the end of 2026, and 3.1 percent at the end of 2027, a path ¼ percentage point lower than projected in June.
- The chair said there was not widespread support for a 50 basis point cut at the meeting, and that the policy has been doing the right thing so far this year, reacting now to the much lower level of job creation and other evidence of softening in the labor market.
Summary generated automatically from the transcript and the statement.