Fed cuts interest rates by 25 basis points, Powell says this is a risk management rate cut

PANews reported on September 18 that according to the Securities Times, at 2 a.m. Beijing time on September 18, the Federal Reserve announced that it would cut interest rates by 25 basis points, reducing the federal funds rate from 4.25% to 4.50% to 4.00% to 4.25%, in line with market expectations. After the Federal Reserve announced its interest rate decision, the market responded violently. The three major U.S. stock indexes plunged quickly after rising in the short term. The US dollar index plunged straight, hitting a new low since 2025, and then rose sharply, turning from a decline to a rise.

The drastic market fluctuations are closely related to the subsequent monetary policy press conference held by Federal Reserve Chairman Powell. He said that the 50 basis points cut rate has not received widespread support and there is no need to adjust interest rates quickly. Today's move can be regarded as a risk-management rate cut. This means the Fed will not enter a continuous cycle of interest rate cuts. Powell once again stressed that the Fed is firmly committed to maintaining its independence. No market participants have been seen taking into account the risk of Fed independence.

The latest interest rate dot chart shows that Fed officials' median expectation is that they will cut interest rates twice this year (25 basis points each), one more than the forecast in June this year. At the same time, Fed officials expect that after three interest rate cuts this year, interest rates will be cut by 25 basis points in 2026 and 2027.

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