Fed Lowers Rates by Quarter Point, Signals Two Cuts for 2025
Federal Reserve officials lowered their benchmark interest rate for a third consecutive time, but reined in the number of cuts they expect in 2025, signaling greater caution over how quickly they can continue reducing borrowing costs.
The Federal Open Market Committee voted 11-1 on Wednesday to cut the federal funds rate to a range of 4.25%-4.5%. Cleveland Fed President Beth Hammack voted against the action, preferring to hold rates steady.
New quarterly forecasts showed several officials penciled in fewer rate cuts for next year than they estimated just a few months ago. They now see their benchmark rate reaching a range of 3.75% to 4% by the end of 2025, implying two quarter-percentage-point cuts, according to the median estimate.
Only five officials indicated a preference for more reductions next year.
A majority of economists in a Bloomberg survey had expected the median rate estimate would point to three cuts next year.
Policymakers also made a subtle adjustment to the language of the statement released after their meeting, saying they would assess several factors “in considering the extent and timing of additional adjustments” to the policy rate.
Previously, they merely said “in considering additional adjustments.”
Investors, who widely expected the Fed to cut rates at this meeting, will listen for further signals on the potential pace and timing of future reductions when Fed Chair Jerome Powell holds a press conference at 2:30 p.m. in Washington.
Source: Bloomberg
