Fed Cuts Rate 25bps, Policy Remains Data-Dependent

The Federal Reserve last week cut its benchmark rate by 25 basis points — its first reduction of 2025. Officials described the move as a “risk management” cut, citing a softer labor market and upside risks to inflation, and said policy will remain data-dependent. Chair Jerome Powell has been using public remarks to frame the outlook and field questions, and internal divisions have emerged, with Gov. Stephen Miran arguing for steeper cuts while Atlanta’s Raphael Bostic and St. Louis’s Alberto Musalem urged caution. Markets reacted nervously, with Gulf equities slipping even as some Gulf central banks trimmed rates and regional IPO activity continued. Outside analysts warned that aggressive easing or interventions to lower mortgage rates too quickly could reignite asset booms or become inflationary.