September 2025

Good afternoon TAG Talkers,

For most of 2025, eyes have been expectantly trained on the Federal Reserve Open Market Committee (FOMC) as Trump’s administration has called ever more forcefully for cuts to the Federal Funds Rate. On September 17th we finally got our first quarter point (0.25%) cut of 2025 after two modest quarter point cuts at the end of 2024. This brings the Fed’s overnight rate down to a target range of 4.00% to 4.25%.

Clearly, paying less interest on mortgages and other types of loans/debt is preferable. Who in their right mind would want to pay more when they could pay less? On an economy-wide level, the relief of lower interest rates are a “stimulative” action by the Federal Reserve to encourage a more active economy. There should be no surprise why Trump has called loudly and often for these cuts!

We haven’t talked about it in over a year: the Federal Reserve’s “dual mandate” objective as an independent government entity. Chairman Jerome Powell and his other 11 members of the FOMC are charged with the legal duty to pursue the following dual mandate as initially outlined by congress in 1977:

1. Stable prices (2% annual inflation target)
2. Maximum employment

The first objective is fairly straightforward to understand. Within the economy, the Fed wants prices of all goods and services to average a 2% increase annually. In the last 3 years we have gone from sky high inflation approaching a 10% annualized rate down to one that currently sits below 3% as of the September CPI reading.

With inflation still not fully down to the 2% target, some of you may be wondering why we are cutting rates. In comes the second part of that mandate! The new jobs report from August showed some concerning softness in the labor markets, and has required the FOMC to take a harder look at the other side of their mandate, employment. In the last 5 years, the job market has largely grown at a robust rate following the end of the COVID lockdown era. However, for the first time in 4 years a revision to June’s employment data suggests that the US economy actually lost jobs over that month.

As to the cause of a slowdown in employment and risks in the economy, it is hard to pin down any one specific cause. In many companies, artificial intelligence is making companies more efficient which has them revising necessary headcounts. In other areas of the economy, the new tariffs in 2025 have caused some heartburn among consumers and business executives over concerns about higher prices and reduced consumption. Of course, the Trump administration has suggested high interest rates are also a factor because they make it harder for consumers to borrow money for purchases.

Regardless of the exact cause, The FOMC has taken its first step towards balancing both sides of its dual mandate in inflation and employment. In the months ahead, the pricing of bond markets suggest we will get two more rate cuts before year end and just a single cut in 2026. As always, there are omnipresent risks in the economy and we are very fortunate to have the independence of the Federal Reserve when it comes to assisting in keeping prices stable and employment maximized. Our optimistic view for the present and future remains the same. US equity markets are as high as they have ever been, and volatility may crop up in coming months, but the culture of our country’s businesses tends towards innovation and long-term growth. We can’t promise you that every tomorrow will be better than every yesterday, but we can give you our word that The Ansardi Group is looking to the future with your goals and prosperity in focus.

Kind Regards,

Dan Rodbell, MBA
Financial Advisor