U.S. Federal Reserve Chair Jerome Powell attends a press conference in Washington, D.C., the United States, Sept. 17, 2025. The U.S. Federal Reserve on Wednesday decided to lower the target range for the federal funds interest rate by 25 basis points, the first rate cut since December 2024. (Xinhua/Hu Yousong)

The US Federal Reserve on Wednesday decided to lower the target range for the federal funds interest rate by 25 basis points to 4.0 - 4.25 percent, the first rate cut since December 2024, Xinhua News Agency reported on Thursday.

Recent indicators suggest that growth of US economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up. Inflation has moved up and remains elevated to some extent, the Federal Open Market Committee (FOMC), the principal monetary policymaking body of the Federal Reserve System, said in a statement after a policy meeting. 

"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," the statement said. "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 FOMC reiterated its commitment to supporting maximum employment and returning inflation to its 2 percent objective, according to the report.

US stocks opened barely changed on Wednesday, with the Dow Jones Industrial Average up 0.04 percent, the S&P 500 down 0.03 percent and the Nasdaq flat. Major indexes extended losses while Fed chair Jerome Powell made his remarks, before ending mixed at Wedensday's close: the Dow gained 0.57 percent, while the Nasdaq fell 0.33 percent and the S&P 500 slipped 0.1 percent.

In Hong Kong, the Hang Seng Tech Index rose 1 percent to 6,397.63. Most major Chinese ADRs advanced, with the Nasdaq Golden Dragon China Index climbing 2.85 percent, as of press time.

The Federal Reserve's latest rate cut comes amid a sluggish US economy, with both job creation and growth showing signs of weakness, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told Global Times on Thursday. 

US businesses added only 22,000 jobs from July to August, according to the US Bureau of Labor Statistics, and massive revisions to federal jobs data show that the pace of hiring was notably low in summer 2025, according to a CNBC report on Thursday. Meanwhile, the Fed cut rates while personal consumption expenditures inflation stayed at 2.59 percent, which is above the Fed's target rate of 2 percent.

"After ending its tightening cycle in 2023, the Fed's move into an easing phase appears a logical step and signals a more neutral monetary policy stance," Xi Junyang said, adding that lower borrowing costs will help reduce financing costs for companies and households, spurring investment and consumption.

Globally, countries that have yet to ease may now face greater pressure to follow suit, as keeping rates relatively high could weigh on their economies, Xi Junyang said. 

The cut will also help eases pressure from the China-US interest-rate differential, supporting the yuan's stability and potentially boosting overseas demand for the yuan-denominated assets, the expert said.

All 12 members of the FOMC, including Lisa Cook and Stephen Miran, attended the meeting. While 11 members voted for the 25-basis-point cut, Miran voted against the action, preferring a 50-basis-point cut, according to Xinhua.

"We see where we are now, and we took that appropriate action today," said Fed Chair Jerome Powell at a press conference after the meeting, per the Xinhua report. Lowering interest rates will help a struggling labor market, where some people are having a hard time finding jobs, Powell said. 

Powell also expressed concern that the tariffs put in place by the Trump administration could continue to build on goods prices through the rest of this year and into 2026. But the overall effects of tariffs on economic activity and inflation remain to be seen, the report said.

Along with its policy decision, the FOMC released updated economic projections, forecasting US real GDP growth of 1.6 percent in 2025, 1.8 percent in 2026. The Fed also projected the US median unemployment rate would remain at 4.5 percent in 2025, ease to 4.4 percent in 2026.