When the Federal Open Market Committee (FOMC) met on Sept. 16 and 17, it made a key move many had been anticipating. The Fed cut its benchmark interest rate by 25 basis points to a target range of 4.00% to 4.25%, the first rate cut in 2025. Alongside this decision, the Fed signaled that two more similar cuts are expected before the end of the year.
At DeMera DeMera Cameron, we believe that economic policy shifts like this can produce both opportunity and uncertainty for business owners and households. Here is how the recent Fed decision impacts you locally and what steps you can take to stay ahead.
Key Impacts of the Rate Cut
1. Cheaper Borrowing Costs
Lower interest rates mean loans and financing can become more accessible. These lower rates benefit:
- Businesses looking to finance new equipment, real estate, or expansions
- Homeowners or buyers considering mortgages or refinancing existing debt
- Employers investing in capital improvements or operational upgrades
2. Softening Labor Market Risk
The Fed’s decision reflects growing concerns about employment, with signs that job growth has slowed and unemployment is edging up. Businesses should be careful with hiring and staffing decisions in the near term.
3. Inflation Still Elevated
Prices remain higher than the Fed’s 2% target. Inflation pressures persist, particularly due to tariffs and supply chain constraints. Even though the rate cut is meant to support growth, it does not erase inflation risks.
4. Expectations for Future Cuts
Markets are now pricing in the possibility of two additional quarter-point reductions before year-end, as projected by the Fed.
What This Means for Central Valley Businesses & Households
- Business Investments: This could be a favorable moment to move forward with capital projects or equipment purchases when rates are lower.
- Debt Strategy: If you carry high-interest debt on properties, explore refinancing options. Consider locking in fixed rates where possible.
- Cash Flow Planning: With economic pressures and inflation, having reliable projections will help in managing costs and navigating potential volatility.
- Pricing and Costs: Suppliers may still raise prices due to inflation. Make sure to monitor input costs and adjust pricing or contracts accordingly, especially in agriculture or construction.
- Housing and Real Estate: For those considering buying or refinancing property, the lower rate environment could ease monthly payment burdens.
Action Steps to Stay Ahead
- Review any planned debt or financing needs and consider timing before rates shift again.
- Maintain an emergency reserve for unexpected changes in costs or demand.
- Revisit budgets to account for inflation in inputs like fuel, materials, or labor.
- Speak with an expert CPA firm to assess how rate changes affect your tax strategy, including interest deductions and depreciation.
Key Takeaways
The Fed’s September 2025 rate cut marks a turning point. The move may offer breathing room for borrowing and investment, but inflation and labor market pressures are key risks. For Central Valley residents and business owners, now is a time to plan carefully, not react impulsively.
At DeMera DeMera Cameron, we help businesses and families interpret economic shifts, evaluate financial choices, and act with certainty.
Contact us today to talk through the opportunities and risks.