FOMC Cuts Rates Quarter-Point, Signals Pace to Slow Next Year
The Federal Open Market Committee voted to decrease the federal funds rate by a quarter-point on Wednesday – its third consecutive cut – to a range of 4.25% to 4.50%, in a widely expected decision, despite sticky inflation recently and a resilient economy and job market.
Fed officials also lowered their forecasts for unemployment in 2025 and revised their forecasts for inflation in 2025 to 2.5%, up from 2.1% when they last released them in September.
The committee forecasts half of a percentage point worth of rate cuts next year. In September, most Federal Reserve officials expected to make either four or five cuts in 2025. The committee is still “considering the extent and timing of additional adjustments,” the statement read.
The rate cut comes as progress on lowering inflation has stalled in recent months, and the job market has not weakened further. Other metrics, such as consumer spending and GDP growth, indicate the US economy remains strong.
Beth Hammack, the president of the Federal Reserve Bank of Cleveland, voted against the rate cut, preferring to leave borrowing costs unchanged. According to the central bank’s updated Summary of Economic Projections, 10 of the FOMC’s 19 members said they expect to cut rates twice next year. Four expect even fewer cuts, while five expect to cut rates more than twice.
