US Fed slashes rates by 25bp
Print Edition
The US Federal Reserve on Wednesday slashed interest rates by 25 basis points, the third consecutive rate cut in this easing cycle, as it braces for uncertainty stemming from the incoming Donald Trump administration’s tariff policies.
“The economic outlook is uncertain, and the committee is attentive to the risks to both sides of its dual mandate,” the Federal Open Market Committee, the central bank’s policy-setting body, said.
In support of its goals, the committee decided to lower the target range for the federal funds rate by 25 basis points to 4.25 percent to 4.5 percent.
“With today’s action, we have lowered our policy rate by a full percentage point from its peak and our policy stance is now significantly less restrictive. We can therefore be more cautious as we consider further adjustments to our policy rate,” Fed Chair Jerome Powell told a press conference.
After its September 17-18 meeting, the central bank slashed the target range for the federal funds rate by 50 basis points amid cooling inflation and a weakening labor market, marking the first rate cut in over four years and signaled the start of an easing cycle. After its November 6-7 meeting, it further lowered the target range for the federal funds rate by 25 basis points.
According to the Fed’s latest quarterly summary of economic projections, the median projection for personal consumption expenditures inflation among Fed officials is 2.4 percent by year-end, up from 2.3 percent in the September projection. Median projection for PCE inflation in 2025 is 2.5 percent, up from 2.1 percent in September.
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