The Breakdown Fed Cuts Rates Amid Rising Labor Market Risks
22 snips
Sep 19, 2025 The Federal Reserve made its first rate cut since last November, now targeting 4–4.25%, due to softening labor data. Chair Powell described it as a precautionary measure amidst rising political pressures for deeper cuts. There's uncertainty in the markets about whether this is the beginning of a longer easing cycle or a short-term adjustment. The economy shows a stark divide: AI investments boost stock performance, while labor market weaknesses linger, complicating the overall economic landscape.
AI Snips
Chapters
Transcript
Episode notes
Labor Risks Drove A Measured Cut
- The Fed cut rates to 4.00–4.25% citing softer labor data and rising downside employment risks.
- Powell framed it as moving closer to neutral rather than reacting to a full-blown labor crisis.
Fed Balances Inflation And Employment
- Powell said inflation risks are up near-term while employment risks moved down, forcing a trade-off between mandates.
- He described the decision as balancing both sides where "there's no risk-free path."
Don't Expect Aggressive Rapid Cuts
- Expect the Fed to avoid very large rapid cuts unless policy is clearly out of place.
- Use the Fed's language "risk management cut" to anticipate cautious, data-informed easing moves.