Federal Reserve Cuts Rates by 0.25% Amidst Oracle’s Major Victory with TikTok Deal
In a significant week for U.S. markets, the Federal Reserve announced its first rate cut of 2025. The federal funds rate was reduced by 0.25%, bringing it to a range of 4.00%-4.25%. This decision was made as policymakers attempt to balance the concerns of a slowing labor market against the ongoing inflationary pressures.
Fed Chair, Jerome Powell, described the decision as a “risk management cut”. He pointed out that despite the weakening employment data, there are stronger growth expectations. The markets had already factored in the cut with a probability of over 90%. Futures also indicate that additional cuts are likely at the forthcoming meetings in October and December.
The aim of the rate reduction is to support an economy that is receiving mixed signals. On one hand, unemployment rose to 4.3% in August with only 22,000 jobs added. On the other hand, inflation increased to 2.9%. Powell emphasized the Fed’s cautious approach in the face of tariff uncertainties and above-target price pressures. These factors have complicated the central bank’s decision-making process this year.
Source: BlackRock Financial Insights