Monday, Sep 15, 2025 • Brian Lopez : Contact

On Sept. 17, the Federal Reserve will announce whether it plans to cut interest rates, a decision that could ripple across the nation’s economy and directly affect Texas industry and households. Markets are largely betting on a quarter-point cut, but the outcome will depend on a delicate balance of economic signals—including persistent inflation, slower job growth and ongoing uncertainty over trade policy.

To better understand what’s at stake, we spoke with David Quigley, a clinical assistant professor of economics at The University of Texas at Arlington. Quigley, who earned his Ph.D. in economics from the University of Illinois at Urbana-Champaign, specializes in political economy and teaches courses in microeconomics, econometrics, international trade, and public economics. In this conversation, he breaks down the factors the Fed is watching and explains how any move on rates could affect Dallas-Fort Worth’s housing market, local industries, and everyday Texans managing debt or making big purchases.

Ahead of the Sept. 17 announcement, what are the main factors the Federal Reserve will be weighing as it decides whether to cut rates?

Quigley: The unemployment rate and the inflation rate are the main factors that the Federal Reserve will weigh. On one hand, a higher unemployment rate points the Federal Reserve to a rate cut in an effort to boost the economy and avoid a jobs recession. On the other hand, a higher inflation rate points to either keeping the rate steady or increasing the rate in an effort to reduce the inflation rate.

How do the recent labor and employment figures—especially slower job growth and higher unemployment—play into the Fed’s decision-making?

Quigley: Slower job growth and higher unemployment strongly suggest a rate cut is in order. Furthermore, if the labor market is worse than previously suggested by labor market statistics, that might lead the Federal Reserve to cut interest rates more.

President Trump’s tariffs are creating uncertainty in global markets. How might trade policy factor into what the Fed does next?

Quigley: The tariffs and trade policy uncertainty create a complicated picture for Fed policy. Trade policy uncertainty has likely been a significant drag on the job market as businesses are hesitant to hire without knowing what the trade policy will be. On one hand, President Trump has announced significant tariff rates. On the other hand, the highest tariff rates have been repeatedly delayed with no certainty when they would be implemented, if ever. This makes it difficult for businesses to plan. Investments that make sense under high tariffs don’t make sense if those tariffs never come to fruition. Even if a business might be willing to hire workers under higher tariffs, they may be hesitant to do so under trade policy uncertainty because it might not make sense to do those hires if the tariffs are not actually implemented. The reverse is also true for some businesses where they might be willing to hire workers if the tariffs are never implemented, but are unwillinging to hire workers under the threat of higher tariffs even if they haven’t been implemented yet. So in both cases, businesses are hesitant to hire, slowing job growth regardless if the tariffs are ultimately implemented or not. That’s on top of job losses and layoffs that are occurring because of the impact of already implemented tariffs increasing costs for businesses. Future tariff increases would only exacerbate this effect. Previously, businesses might have tried to avoid raising prices or laying off workers under the belief that implemented tariffs might be temporary, but as time has gone on and implemented tariffs have persisted, businesses are starting to raise prices and lay off workers.

However, the increase in prices as a result of tariffs would likely be a one-off impact on the inflation rate. Once businesses account for tariffs in their pricing, further price increases would likey be driven by underlying economic conditions unless tariffs were increased further. Therefore, the effect of tariffs on inflation may be less of a concern for the Fed because once businesses account for tariffs in their prices, the inflation rate would return to target levels on its own, especially with slow job growth.

If the Fed does cut rates, what effect could that have on Dallas-Fort Worth’s sluggish housing market, especially for families trying to buy their first home?

Quigley: The effect of a Fed rate cut would take time to filter to the housing market. However, a lower interest rate would make mortgages more affordable for buyers, helping to boost the housing market. In fact, the effect of the interest rate on the housing market is one of the primary ways that the Fed impacts the economy through its interest rate policy.

Beyond housing, are there particular industries in Dallas-Fort Worth—such as energy, construction or technology—that stand to benefit most from lower rates?

Quigley: Construction would benefit from lower rates as increased demand for building from lower interest rates would boost construction and help finance new projects. Lower interest rates would also help the technology sector by making it easier for startups to secure investments and existing companies to borrow money for new projects. The impact on energy though is going to be more complicated because of other market trends. Lower oil prices are going to be a problem for oil producers regardless of a lower interest rate. A lower interest rate would make it cheaper to finance new oil drilling projects, but lower oil prices would dampen the enthusiasm for new projects. Significant pullback on renewable energy by the government is going to impact those projects even as lower interest rates make financing renewable energy projects cheaper.

For everyday Texans carrying credit card debt or considering big purchases like a car, how would a rate decrease affect their personal finances?

Quigley: It will take a while for lower interest rates to filter down to consumers, and a high inflation rate and worse job market may lead banks and credit companies to not lower their rates as much as the Fed does. While the interest rates that banks and credit companies charge is tied to the rate the Fed sets, if these businesses see increased credit risk from consumers facing a bad job market and higher prices, these companies may be hesitant to fully lower the interest rates they charge to consumers as a result.