fed pulls the trigger: quarter-point rate cut arrives
Washington, Wednesday, 17 September 2025.
the federal reserve has officially lowered interest rates by 0.25%. chair powell called it a ‘risk management cut’. the central bank expects potentially two more cuts by year’s end. while this aims to boost the economy, inflation remains a concern. goods prices are rising. powell noted that companies have largely absorbed trump’s tariffs so far. one governor dissented. he wanted a deeper half-point cut. this move impacts everything from mortgages to credit cards. mortgage refinance demand already spiked almost 60%.
market reaction and expert opinions
The market had largely anticipated this move, with expectations of further easing before April 2026 [7]. Nina Stanojevic, a Senior Investment Specialist at St. James’s Place, suggested that the market had already priced in the rate cut [7]. She emphasized that the policy tone and future interest rate direction would be more critical to observe [7]. David Kelly, Chief Global Strategist at JPMorgan Asset Management, views the Fed’s decision as a positive sign, indicating the central bank’s commitment to its independence [1].
potential impact on stocks and bonds
Historically, U.S. stocks and bonds have tended to rise following the Fed’s initial rate cut [6]. However, Citigroup research indicates that stocks often experience an initial surge, followed by a retracement before the close on the day of the announcement [6]. The current environment, characterized by an AI-driven capital expenditure boom, could support a soft economic landing, which is generally favorable for stocks [6]. A shallower rate cut cycle is anticipated given the current high level of the S&P 500 [6].
gold’s brief surge
In related market activity, gold prices briefly exceeded $3,700 per ounce before settling around $3,660 [7]. Spot gold reached $3702.84 per ounce on Wednesday, marking the first time it had broken through the $3700 barrier [7]. Tim Waterer, Chief Market Analyst at KCM Trade, attributed the rise to a weakening dollar and expectations of further rate cuts. Profit-taking near $3,700 led to a slight pullback [7]. Waterer suggests that a dovish tone from the Fed could propel gold prices higher again [7].
fed’s future path
The Federal Open Market Committee (FOMC) anticipates two more rate cuts by the end of 2025, potentially during the October and December meetings [2]. However, projections extend into 2027, with expectations of reaching a long-run neutral rate of 3% [2]. Simon Dangoor, head of fixed income macro strategies at Goldman Sachs Asset Management, believes that the FOMC is leaning towards further easing, influenced by the committee’s more dovish members [1][2]. He suggests that only a significant upside surprise in inflation or a labor market rebound could alter this course [1].