Federal Reserve Indicates Additional Rate Cuts Following Initial 2025 Reduction
The Federal Reserve announced its initial rate cut of 2025 on Wednesday, reducing the benchmark rate by 0.25 percentage points to a range of 4.00% to 4.25%. In a noteworthy shift, the Fed’s “dot plot” projections now indicate two more rate cuts are anticipated for 2025. This would bring the benchmark rate down to a projected range of 3.50% to 3.75% by the end of the year.
The central bank has increased its projections for economic growth while maintaining steady inflation forecasts. Officials have highlighted concerns about the labor market. Fed Chair Jerome Powell pointed out that “the marked slowing in both the supply of and demand for workers is unusual in this less dynamic and somewhat softer labor market.”
This dovish stance emerges amidst political pressure from the Trump administration. The newly appointed Fed Board member, Stephen Miran, played a role in the decision-making process. According to Powell, this move positions monetary policy in a “more neutral” stance.