After a monetary policy pause that began at the start of 2025, the Federal Reserve’s monetary policy committee (FOMC) voted to reduce the short-term federal funds rate by 25 basis points at the conclusion of its September meeting. This move decreased the target federal funds rate to an upper rate of 4.25%. Economically, the cut is justified given signs of a softening labor market and moderate inflation readings. However, Chair Powell characterized today’s easing as a “risk management cut,” rather than one driven by fundamental changes in the economic outlook. NAHB is forecasting another 75 basis points of easing in the coming quarters, with 25 of that total coming before the end of the calendar year. …Overall, today’s decision was widely expected. Much of the benefit of today’s easing was already priced into long-term interest rates, but the rate cut will benefit business loan finance conditions. Further, additional rate cuts lie ahead.

Related by NAHB: What the Fed Rate Cuts Mean for Housing and the Economy