Federal Reserve Cuts Interest Rates Amid Concerns Over Job Market

Thu Oct 23 2025 13:21:58 GMT+0300 (Eastern European Summer Time)

The Federal Reserve has announced a 0.25 percentage point cut in interest rates, its first reduction since December 2022, while signaling worries about a potential slowdown in the job market.

On September 17, the Federal Reserve reduced its key lending rate to a range of 4% to 4.25%, the lowest since late 2022. The decision, supported by most committee members, aims to stimulate a weakening job market. While the unemployment rate remains low, recent job reports have shown disappointing growth, prompting the Fed to act. Chairman Jerome Powell highlighted the need for cautious policymaking amid ongoing economic uncertainties, including inflation and labor market challenges.

After extensive debate and pressure from the White House, the Federal Reserve has cut interest rates. The central bank announced a reduction of 0.25 percentage points, lowering the rate to between 4% and 4.25%. This marks the first cut since December 2022 and is expected to lead to further reductions aimed at decreasing borrowing costs across the nation.

However, this action comes with a cautious note as the job market shows signs of stagnation. Federal Reserve Chairman Jerome Powell pointed out during a news conference that unemployment remains low at 4.3%, yet there are emerging risks that require attention. The Fed noted that while inflation has eased from its pandemic-induced highs, concerns over job growth have underscored the importance of this rate cut.

In recent months, the US has reported slower job growth, including a job loss in June—the first since 2020. Economists, such as Sarah House from Wells Fargo, suggest that the Fed is addressing a rapidly changing labor market with this decision. She remarked that the central bank wants to avoid any unnecessary economic slowdown while navigating these challenges.

The vote to cut rates saw support from 11 of the 12 committee members, with some advocating for a more significant decrease, citing weakening economic signals. Despite concerns about rising inflation—currently at 2.9%, above the Fed's target—analysts believe that the rate cut is justified to bolster employment and economic growth.

This rate adjustment has not satisfied critics, particularly President Donald Trump, who previously described the Fed’s rate policy as over-cautious and has publicly expressed his desire for even lower rates. Trump's administration has been seen as intensively pressuring the Fed regarding its decisions, raising questions about the independence of the bank.

As the Fed navigates this complex economic landscape, Powell acknowledged the challenge ahead: There are no risk-free paths right now. The central bank's next moves will be closely monitored as policymakers weigh the need for further cuts against potential inflation risks and labor market dynamics.