Today, the Federal Reserve Open Market Committee voted to lower interest rates by half a percentage point to between 4.75% and 5.0%.

“Recent indicators suggest that economic activity has continued to expand at a solid pace,” according to its announcement. “Job gains have slowed, and the unemployment rate has moved up but remains low. Inflation has made further progress toward the committee’s 2% objective but remains somewhat elevated.”

SIA Economist Michael Schultz said the move was a positive.

“With the deteriorating labor market, this aggressive action is quite welcome,” Schultz said. “While this will not immediately or radically impact business conditions, it certainly demonstrates that the current board of governors are serious about balancing the Fed’s dual mandate of low inflation and maximum employment and intent on delivering the near-mythical soft landing.”

The Federal Reserve’s benchmark, short-term rate had held at 5.25% to 5.5% since July 2023 — a 23-year high — as the Fed worked to fight inflation, USA Today reported.

Lower interest rates going forward was one of SIA’s base assumptions when it forecast staffing industry revenue would rise 5% in 2025 after falling 10% this year in its US Staffing Industry Forecast: September 2024 Update report.

One potential effect of higher interest rates on staffing is higher caution among client firms.

“High interest rates reduce the net present value of projects, investments, and company valuations, causing businesses to cancel or delay projects and hiring,” according to the Insights on the Recent Downturn in US Temporary Staffing 2024 report by SIA. “Technology companies are particularly sensitive to high interest rates, and this has led to not only layoffs at large technology companies that overhired during the pandemic, but also to a pullback in demand for IT staffing.”