Daily Newsletter 9/16/25

The next Federal Reserve interest rate decision is scheduled to be announced tomorrow. The announcement will be followed by a press conference from Fed Chair Jerome Powell, providing insights into the decision and the central bank's outlook.

The Federal Reserve is widely anticipated to announce its first interest rate cut of 2025, largely in response to a noticeable slowdown in the labor market. However, it is essential to remember that the Fed operates under a dual mandate—a responsibility to promote both maximum employment and stable prices. This balancing act is complex, especially with inflation currently at 2.9%, which adds additional challenges to decision-making.

Given this backdrop, we see two plausible paths for the Fed moving forward. One option is to adhere strictly to its dual mandate, potentially having to sacrifice progress in either employment or inflation control to achieve the other. The alternative is that the Fed might redefine its goals, possibly reconsidering its long-held target of maintaining inflation at around 2%. This reconsideration comes amidst substantial political pressure and evolving economic realities.