On September 17, 2025, the Federal Reserve reduced its benchmark federal funds target rate by 0.25% to a range between 4% and 4.25%, bringing that rate to its lowest level in three years. The move came as Fed officials judged recent labor-market softness, a key indicator of a slowing economy, as a greater economic threat than lingering inflation. 

The Fed will continue to monitor what Fed Chair Jerome Powell called “downside risk” from weakening jobs growth to determine whether further cuts are warranted at the two remaining meetings this year. Many observers expect the Fed to “normalize” interest rate policy in a range of 3% to 3.50% by mid-2026.

Just as the Fed has a delicate balancing act in determining the appropriate interest rate that will promote both full employment and low inflation, ACGA attempts to balance the best interests of charitable gift annuity issuers and their annuitant supporters. ACGA’s Rates & Regulations Committee employs a rules-based approach to monitoring weekly interest rate fluctuations over different bond durations and time periods to determine its suggested maximum payout rates. 

Considering the September 17 Fed cut and the possibility of further cuts this year, the Committee will closely monitor changes in rates through year-end to assess whether and when a change in the Suggested Rates is warranted. Should the Committee determine that a rate decrease is merited, the decision will be clearly communicated to all ACGA member organizations.