Federal Reserve Cuts Rates; Gary Cohn Discusses Economic Impact

The Federal Reserve announced a quarter-point reduction in interest rates, bringing them to a range of 4% to 4.25%, the lowest level since 2022. During an interview on “Face the Nation” on September 21, 2025, Gary Cohn, vice chairman of IBM and former director of the U.S. National Economic Council, discussed the implications of this change and the current state of the U.S. economy.

Understanding the Rate Cut

Cohn emphasized that the Federal Reserve’s decision to lower interest rates is significant, indicating a shift in monetary policy. The Fed projected that rates could be cut two more times this year, potentially reducing the federal funds rate to 3.6% by year-end. He noted a division within the committee, with seven members opposing further cuts while ten favored them.

“The Fed clearly showed themselves to be independent thinkers,” Cohn stated, highlighting the importance of their projections based on current economic data. He explained that while lower rates generally mean cheaper borrowing, the actual impact on consumers may vary. The rates set by the Federal Reserve primarily influence the overnight borrowing rates between banks, not the long-term rates that affect consumers for loans, mortgages, and credit cards.

Labor Market Dynamics

Cohn addressed the Fed’s assessment of the labor market, which Fed Chair Jerome Powell described as “really cooling off.” He acknowledged a significant decline in job creation, noting that the U.S. economy has shifted from generating over 100,000 jobs monthly to fewer than 50,000. This trend reflects broader economic pressures, including rising input costs and a shift in corporate strategies towards cost management.

Companies are increasingly cutting labor costs as they navigate a challenging environment. Cohn pointed out that businesses, having previously retained employees during the pandemic, are now reducing their workforce to maintain profit margins. “We have seen across the board… anecdotal evidence from corporate CEOs indicates aggressive management of human capital overhead,” he remarked.

Despite contrasting narratives from the administration claiming stable job growth, Cohn maintained that the data reveals a more complex picture of the labor market.

Impact of New Visa Regulations

During the interview, Cohn also addressed the implications of a recent executive order signed by President Biden, instituting a $100,000 one-time fee for H-1B visa applications for highly skilled foreign workers. Reports indicated that this sudden policy change caused concern within tech companies, including IBM.

Cohn clarified that initial panic surrounding the order had subsided, as companies now understand their H-1B visa status. He expressed support for the fee, arguing that it would ensure that companies only seek these visas for highly skilled individuals who cannot be sourced domestically.

“This visa program is meant for high-skilled labor,” Cohn stated, suggesting that the fee would ultimately benefit the U.S. economy by attracting essential talent.

In summary, Cohn’s insights on the Federal Reserve’s decision and the evolving labor market underscore the complexities facing the U.S. economy as it adapts to changing conditions. The implications of these developments will continue to unfold in the coming months.