As of its September 16-17, 2025, meetings, the Federal Reserve announced it is cutting its benchmark interest rate to 4.00%-4.25%. This is the first time this year, in 2025, that interest rates have gone down. The decision to keep interest rates steady was announced following the September Federal Open Market Committee meeting.
The Fed stated that their benchmark inflation rate is still 2%, that wage growth is sticking close to inflation, and unemployment edged up but remained low. The Fed’s press release stated, “Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated.”
Overall, the Fed indicated that they are not pursuing a large rate cut in this meeting, as they believe there’s no urgency to act fast. Instead, they are adopting a patient approach, allowing time to assess the impact of existing policies before determining their next steps.
The Federal Reserve’s 2025 Interest Rate Announcement Schedule
The Federal Open Market Committee (FOMC) meets eight times a year and announces its decision on what to do with the benchmark interest rate. The schedule for 2025 is as follows:Â
- January 28-29Â
- March 18-19Â
- May 6-7Â
- June 17-18Â
- July 29-30Â
- September 16-17Â
- October 28-29Â
- December 9-10Â
Read the full September 17th FOMC statement below:Â
Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen. In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4‑1/4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.
The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.
The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; Jeffrey R. Schmid; and Christopher J. Waller. Voting against this action was Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting.
What is the Benchmark Interest Rate and What Does it Mean for Homebuyers and Homeowners? Â
It’s important to look at the broader economic picture when buying or selling a home. These interest rate decisions can have a direct impact on your wallet. When buying a home, most people need to borrow the required funds in the form of a mortgage. The mortgage interest rate refers to the percentage a borrower pays to a lender on the funds borrowed for the purchase. Your lender determines your interest rate based on various factors such as credit risk, market conditions, and of course, the benchmark federal funds rate.
Your mortgage rate isn’t the same as the benchmark rate, but they are connected. The federal funds rate is set by the federal government at its scheduled meetings. It is used to influence the interest rates lenders offer on other types of loans—like mortgage loans. When getting a mortgage rate, lenders take into account the benchmark rate, alongside other factors like your debt-to-income ratio and credit score.Â
Now that you’re more educated on interest rates and how they may impact your home purchase and investment, you could be ready to start home hunting. Your REMAX agent will be there to guide you, every step of the way.
