The FED cuts rates by 0.25%, the ECB maintains them. Savings Portfolio at 3.75% in Dollars and 1.60% in Euros

The Fed cuts rates by 0.25%.

The Federal Reserve (Fed) reduced interest rates by 0.25% at its September 2025 meeting, setting the target range for the Fed Funds rate at 4.00–4.25% from the previous 4.25–4.50%. This is the first rate cut of 2025, after a total reduction of 1% in the fall of last year.

Powell’s stance until just a few weeks ago had been to keep rates unchanged to observe the impact of the new tariffs on inflation. However, the latest labor market data showed much weaker job creation than previously reported. This led the central bank to cut rates in an attempt to prevent a further slowdown in the labor market.

Stephen Miran, one of Trump’s most trusted economic advisers and now appointed as a Fed Board member, attended a meeting for the first time yesterday. Miran expressed his disagreement with the decision, stating that he would have preferred a 0.50% cut. Looking ahead to the end of 2025, he is calling for additional reductions of 1.25%.

It is well known that the Trump administration wants a more politicized Fed, working closely with the Treasury to keep public debt financing costs under control.

The U.S. central bank has a dual mandate: price stability and maximum sustainable employment (in this it differs from the ECB, which has only the price stability objective). In recent days, Miran has also invoked a third mandate for the Fed: pursuing “moderate long-term interest rates.” This is not entirely new, since the 1977 Federal Reserve Act refers to all three mandates.

In practice, recent interpretations of the Fed’s goals have focused on the dual mandate, considering long-term rate moderation more as a byproduct of containing inflation. However, the Trump administration has turned the lowering of long-term yields into one of its main policy objectives, and the market seems to believe it, as 10-year Treasury yields have fallen to around 4%.

As for official rates, Powell refrained from making projections or promising further cuts. Nonetheless, the median of FOMC members’ forecasts points to two additional 0.25% cuts by year-end.

The ECB kept rates unchanged

By contrast, there were no surprises at the European Central Bank (ECB) meeting. The ECB kept the deposit rate unchanged at 2% for the second consecutive meeting. Inflation in Europe is close to the 2% target, while growth remains weak. Still, it is resilient enough to withstand the effect of U.S. tariffs.

Therefore, the ECB has no strong argument to move rates from what is considered a long-term equilibrium level.

Savings portfolio remains at 1.60% in Euros, drops to 3.75% in Dollars

As for our portfolios, official rates are especially relevant for savings portfolios, since they directly reflect rate movements, after fees. Following the central banks’ decisions, the net yield (IRR) of our savings portfolios is as follows:

• 1.60% for the euro portfolio (unchanged)
• 3.75% for the dollar portfolio* (down 0.25%)

*Important note: for an investor whose life expenses are in euros, this implies an exchange rate risk that must be considered.

inbestMe’s savings portfolios are an ideal option for those seeking a solution for liquidity and emergency funds. The IRRs of our savings portfolios have always remained a better option than traditional deposits:

• Accumulating (7.4%), almost 2% more in euros than bank deposits (5.5%) up to 1 year.

• Accumulating (12.8%), 8% more in dollars than accumulated by bank deposits (4.8%) at 1 year in this currency.

For other objectives, other portfolio options: target, bonds, index funds, and pension plans

For investors who prefer to lock in a specific return for longer, accept slightly more risk, or commit to a fixed term, we remind you that we have a full range of target return portfolios and bond portfolios (both in euros and dollars) that allow exposure to longer maturities/durations.

👉 In particular, please note that the Target Portfolio NOV/28 is open until 09/30 for new account openings or additional contributions.

These portfolios have now become more attractive due to the latest ECB moves.

If your horizon is medium or long term, it is more convenient to consider our index fund portfolios, and for retirement our pension plan portfolios, as shown in the table above.

All of them have generally achieved excellent returns despite the volatile environment of this first half of the year.