The Federal Reserve reduced its benchmark interest rate by 0.25%, bringing it to a range of 4.25%-4.5%. This marks the third consecutive rate cut, reflecting the central bank’s cautious approach to monetary policy. However, the Fed has scaled back its expectations for further easing in 2025, now projecting only two additional cuts next year. The Federal Open Market Committee largely supported the decision, though Cleveland Fed President Beth Hammack dissented, advocating for no change in rates.
New projections from the Fed reveal resilience in the US economy, standing at 4.2% unemployment in November, revised up to 2.1% in 2025. Inflation, on the other hand, continued to be a cause for concern with the latest estimates indicating the rate could reach 2.5% by the end of 2025, beyond the Fed’s target of 2%. This has redlighted some officials to more caution, warning against aggressive cuts in rates that might permit inflation to persist.
But, of course-the market reacted pretty mottled upon the announced move-the S&P 500 is falling, as US Treasury yields and the Bloomberg Dollar Index are rising-but investors anxiously await at least word clarification from Fed Chairman Jerome Powell of further central bank means ahead in general. A step that was taken to underline how Federal Reserve policymakers manage to achieve a balance by taming surging inflation amid continuous economic growth concerns, having realized that volatility still impinges on views of global prospects.
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Source: Moneycontrol
News Desk
