Federal Reserve Chair Jerome Powell tells a news conference about the US central bank's decision to cut its key interest rate by 0.25 percentage points
This is the Fed's first cut this year and puts the target range for its main lending rate at 4% - 4.25%
Speaking to journalists, Powell says "the balance of risks has shifted" toward the employment side of the Fed's mandate, where as the risks had previously been tilted toward inflation
In their announcement, Fed officials indicated they expect two more quarter-point rate cuts this year.
In voting for this cut, only one Fed official broke rank and pushed for a larger cut, writes our New York business correspondent Michelle Fleury. It was Stephen Miran, who just recently joined the board of governors and is seen as close to the president
President Donald Trump has criticised Powell for not cutting interest rates faster, calling him everything from "too late" to a "numbskull"
Powell comments on new board member with White House ties
Danielle Kaye
New York business reporter
The Fed's so-called dot plot - a quarterly chart that outlines where all Fed officials think rates will go in the next few years - showed that most officials now expect two more quarter-point rate cuts this year.
That signals a median federal funds rate of 3.6% by the end of 2025 - below previous projections in June of 3.9%.
Natalie Sherman
New York business reporter
The decision the Fed just announced - a cut of 0.25 percentage points - is what we expected.
But investors will be looking carefully at this release for what it says about the future.
The statement from the Fed acknowledges the recent weakness in the labour market, saying job gains have "slowed".
That's a change from July, when the bank's statement described the job market as "solid".
But the bank is also pointing out the risks of higher inflation, noting that the pace of price increases have "edged up".
Natalie Sherman
New York business reporter
Image source, ReutersThe Fed’s cut today is a response to weakness in the job market, which is creating jobs at a much slower pace than policymakers thought when they last met in July.
Unemployment edged up to 4.3% last month, while the US has added an average of about 29,000 jobs over the past three months.
The Fed’s cut may suggest new concerns about the job market, but it doesn’t mean the economy is falling off a cliff.
New data this week showed retail was stronger than expected in August, while manufacturing output also bounced back after a decline the previous month.
Many analysts still expect the US economy to grow, though more slowly than last year.
Pantheon Macroeconomics, for example, is predicting growth of 1.7% in 2025, compared to 2.8% in 2024.
The Fed has announced a cut to its key interest rate by 0.25 percentage points.
This puts the target range for its main lending rate at 4% - 4.25%.
We’ll bring you more as we get it.
Leanna Byrne
Presenter, BBC World Service
"Under normal circumstances the Fed should be even more aggressive. But the world is not normal now."
That’s what former Fed Governor Frederic Mishkin told me ahead of today’s rates decision.
He’s talking about the increasing pressure from Donald Trump and other cabinet members on the independence of the Federal Reserve.
The president wants to see bigger cuts - he thinks they’ll do more to get the economy moving.
But as Mishkin explains, "We all love low interest rates. But if you pursue short run policies then in the long run you don’t do very well."
Danielle Kaye
New York business reporter
Concern about the Fed's independence has taken centre stage this year.
Political pressure became an issue for economists and financial markets when President Trump, after returning to the White House, started to push Fed Chair Jay Powell to lower rates and threatened to fire him.
More recently, Trump's attacks have shifted to an effort to shake up the entire Fed board.
He has tried to fire Fed Governor Lisa Cook, saying she had committed mortgage fraud. Cook denied the allegations and recent financial documents appeared to undercut them. A federal appeals court on Monday ruled that Trump cannot remove Cook, allowing her to stay in her role for the Fed's policy meeting this week.
On top of that legal battle, Stephen Miran - the current chair of the Council of Economic Advisers - was confirmed by the Senate to join the Fed board, adding to concerns about the central bank's independence.
Senator Elizabeth Warren, a Democrat, warned that Miran could be seen as a "puppet" who would not be trusted as an independent voice on the board.
Natalie Sherman
New York business reporter
Image source, ReutersIt’s been widely expected for weeks that the Fed will announce a cut to interest rates today – its first since last December.
The bank is expected to make a cut of 0.25 percentage points. That puts the target for its key lending rate in the range of 4%-4.25%, the lowest since late 2022.
The reduction would suggest Fed officials believe the economy needs a boost from lower borrowing costs, as the job market shows signs of stalling.
But how much support will it need and how low could rates go?
Investors will be looking for clues from the forecasts the Fed will release, as well as the news conference by Federal Reserve Chairman Jerome Powell.
Expect him to field questions about the health of the economy – and how he plans to handle the Fed’s fight with President Donald Trump, who has taken increasing steps to try to control the institution, which traditionally sets policy independent of the White House.
Natalie Sherman
New York business reporter
Image source, ReutersTrump has been pushing the Federal Reserve to cut interest rates for months.
That’s not to say he’s acknowledging any concerns about the job market or the effects of his tariffs or immigration crackdown.
But he’s argued that high interest rates are forcing the US government to pay more to cover its debt payments, and that the economy - especially the US housing market - could be doing even better with lower borrowing costs.
The attacks have had the convenient effect of steering blame for the slowdown in the economy to the Fed, rather than his own policies.
But even if the Fed is finally cutting today, it’s not clear if he’ll be satisfied - he’s previously called for interest rates to go as low as 1%.
Welcome to our live coverage as the US central bank is set to announce its decision on interest rates.
The announcement is set to be released at 14:00 ET (19:00 BST), and Federal Reserve Chair Jerome Powell will hold a news conference 30 minutes later.
The decision will have a strong impact on investment, business and the daily lives of Americans, as it will affect everything from mortgage rates to pensions.
It will also have political implications, as President Donald Trump has repeatedly criticised Powell for not cutting rates quickly enough.
Stay with us as we bring you the Fed decision as soon as it's announced, along with all the reactions and analysis.