Federal Reserve Cuts Interest Rates, Signals Slower Reduction Pace for 2025
On Wednesday, December 18, 2024, the Federal Reserve executed its third consecutive interest rate cut, reducing its benchmark rate by 0.25 percentage points to a range of 4.25%-4.5%. Despite this, the central bank hinted at a more cautious approach for 2025, projecting only two additional rate cuts instead of the previously anticipated four.
Fed Chair Jerome Powell described the decision as “a closer call”, attributing recent inflation readings as “the single biggest factor” in the deliberations. Notably, consumer prices rose 2.7% annually in November, remaining above the Fed’s 2% target. The decision, however, wasn’t unanimous, with Cleveland Fed President Beth Hammack voting against the cut.
The markets didn’t take kindly to the news. The Dow Jones fell over 1,000 points as investors expressed concerns about the slower pace of future cuts. Despite this, Powell emphasized the resilience of the U.S. economy, stating it has “just been remarkable” when compared to other developed nations.
- Key Points:
- Federal Reserve makes third consecutive interest rate cut
- Central bank hints at slower rate reduction pace for 2025
- Markets react negatively, Dow Jones falls over 1,000 points
For more details, visit the official Federal Reserve press release here.