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September 17, 2025 News analysis

Maine bankers see modest boost to economy from Fed rate cut

Sign of the US Federal Reserve Image / Adobe Stock The Federal Reserve on Wednesday lowered interest rates by a quarter of a percentage point and signaled the possibility of two more rate cuts this year.
Fed Chair Jerome Powell at press conference Screen shot Fed Chair Jerome Powell told reporters that Wednesday's rate cut was a "risk-management cut."
By Renee Cordes

Maine bankers expect Wednesday’s interest rate cut by the Federal Reserve to provide a modest boost for business amid signs of weakness in some parts of the U.S. economy.

Citing slowing growth in the first half of the year, central bankers reduced the target for the benchmark federal funds rate by a quarter of a percentage point a range of 4 to 4.25% and signaled the possibility of two more cuts this year.

Fed Chair Jerome Powell called Wednesday’s move a “risk-management cut,” indicating that future cuts are not a certainty as the Federal Open Market Committee seeks to achieve maximum employment while simultaneously taming inflation.

Andrew Silsby of Kennebec Savings Bank
File photo
Andrew Silsby

“That dual mandate is a real challenge, because essentially if there’s high inflation, they have got to slow the economy, and the way they slow the economy is to push rates up,” said Andrew Silsby, president and CEO of Kennebec Savings Bank.

Silsby said that while the Fed has been more worried about inflation in recent years, jobs have become a greater concern, “and so they’re going to head in a different direction.” He also noted that while financial markets are pricing in further cuts, markets are not always right.

In the short term, lower rates mean that home equity loans and commercial loans will be “reset down,” said Simon Griffiths, president and CEO of Camden National Corp. (Nasdaq: CAC).

Simon Griffiths
File photo
Simon Griffiths

That’s going to “increase opportunities to invest, and I think that’s generally going to be positive,” he said.

Griffiths also said that despite “resilient” consumers in the U.S. economy, there are some “pockets where there’s a little softness,” like a drop in Canadian tourism in North Conway, N.H. However, he anticipates tariffs to have only a “modest impact on inflation.”

Mortgage lending

Dava Davin, Portside Real Estate Group, standing outside a home.
File Photo / TIM GREENWAY
Dava Davin

Wednesday’s move by the Fed is not expected to have a big impact on mortgage rates, which depend more on the prices of Treasury bonds bought and sold by private investors in financial markets.

“The rate cuts have already been priced into the mortgage rates … so we will not see a huge change in behaviors,” predicts Dava Davin, owner and CEO of Portside Real Estate Group. “The buyers will have more buying power now than they have had all year, so that is positive for the housing market.”

David Libby of Town & Country FCU
File Photo / Jim Neuger
David Libby

David Libby, president and CEO of Town & Country Federal Credit Union, said that “in order for 10-year bond rates to come down, and likewise member mortgage rates, are for long-term inflation and U.S. government debt to come down and be reduced. This may take more time.”

But he said that Wednesday’s rate cut provides “meaningful opportunities” for borrowers by reducing the overall cost of credit and making refinancing more attractive.

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