What the Fed Did, and Why

On September 17, 2025, the Fed cut its benchmark rate by 25 basis points, lowering the federal funds target range to 4.00%–4.25%. It is the first rate cut since December 2024.

The Fed made clear in its statement and in accompanying comments that it was acting in response to signs of weakening in the labor market, even though inflation remains elevated. Some of the key data points:

• Unemployment: The rate ticked up to about 4.3% in August, up from 4.1–4.2% earlier in the year.

• Job Growth: Non‐farm payrolls rose by only about 22,000 jobs in August, well below expectations. Prior months were revised downward significantly, reducing the estimated strength of hiring earlier in the year.

• Inflation: Consumer Price Index (CPI) rose about 2.9% year over year in August; core CPI (excluding food and energy) about 3.1%. Both remain above the Fed’s longer‐run target of 2%.

In its press release, the Fed said: “Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated.” Federal Reserve

So: the Fed judged that the downside risk to employment had risen enough, despite inflation risks, to justify lowering rates, in hopes of supporting growth and preventing a sharper deterioration in the labor market. 

What This Means for the Flexible Talent Industry

By “flexible talent industry,” I mean the world of freelancers, contractors, gig workers, boutique consultancies, remote/contract staff, etc.; workers and firms that rely on non‐permanent, often specialized labor arrangements. How does a Fed rate cut like this affect them?

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