Monetary Policy

The Federal Reserve maintains an inflation target of 2%.

Interest-rate cuts by the Federal Reserve can gradually lower borrowing costs for mortgages, auto loans, and business loans, which tends to encourage more consumer spending and business hiring.

The Federal Reserve relies on regular economic data releases such as the monthly jobs report and inflation report to inform its monetary policy decisions, and disruptions to those data releases can impede policy decision-making.

Federal Reserve policymakers often differ in emphasis when setting interest-rate policy, with some prioritizing the risk of rising unemployment and others prioritizing the risk of persistent inflation above the 2% target.

The Federal Reserve's minutes from its September 16–17, 2025 policy meeting reported that a few participants favored keeping the federal funds rate unchanged at that meeting while almost all participants supported a subsequent rate cut.

The Federal Reserve's 2025 meeting minutes indicated that most participants judged it likely would be appropriate to implement further interest rate cuts over the remainder of 2025.

Lower nominal interest rates reduce the opportunity cost of holding non-yielding assets like gold, making gold relatively more attractive compared with interest-bearing government bonds such as Treasuries.