BOSTON, MA, September 17, 2025 — The Federal Open Market Committee (FOMC) met today to assess the state of the U.S. economy and monetary policy. For the first time since December 2024, the FOMC reduced the Federal Funds Target Rate by 25 bps to a target rate of 4.00-4.25%, matching market expectations. The recent shift in labor data reveals a slowing in the supply of and demand for labor, suggesting an increase in downside risks to employment. For inflation, higher tariffs have pushed up the prices of some goods even as housing services inflation exhibits a downward trend. Non-housing services inflation continues to print above the Fed’s 2% target. The Fed’s dual mandate stands in tension because risks to employment tilt to the downside and risks to inflation tilt to the upside. Given the shift in the balance of risks, the economic outlook, and a policy rate considered to be in restrictive territory, the Fed took a measured step to balance the dual mandate.

To receive the full commentary, please contact us at [email protected].