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5mo ago

Fed Cuts Rates by 25 Basis Points, Signals Two More This Year

Policymakers cited softening hiring as the key risk, with questions about the central bank’s independence growing.

Federal Reserve Chair Jerome Powell gestures during a press conference
Image
A pedestrian walks past the Bank of Canada building in Ottawa, Ontario, Canada, May 23, 2017. REUTERS/Chris Wattie/File Photo
The exterior of the Federal Reserve building is seen in Washington, D.C., U.S., June 14, 2022. REUTERS/Sarah Silbiger/File Photo

Overview

  • The decision lowers the federal funds target to 4.00%–4.25%, the first reduction since December 2024.
  • New projections pencil in two additional quarter-point cuts in 2025, with little change to unemployment or inflation forecasts.
  • The vote was 11–1, with newly confirmed Governor Stephen Miran favoring a 50-basis-point move.
  • Officials pointed to slowing job gains and rising downside risks to employment even as CPI hovered around 2.9% in August.
  • The move followed pressure from President Trump and rapid board changes, and some strategists warned perceived political influence could raise market risks.