Interest rates set by the U.S. Federal Reserve lowered for the first time in the year 2025
The Federal Reserve (Fed) has announced a decision to lower interest rates in an effort to boost economic growth and combat persistent uncertainty about the economic prospects for the first half of 2025.
In a move that aligns with market expectations, the Fed's latest decision sees the federal funds rate reduced by 25 basis points, bringing it down to a range of 4.00-4.25%. The decision was made during the Fed's meeting on [insert date], and the next meeting is scheduled for October 29.
The decision to cut interest rates comes as inflation has accelerated and remains somewhat elevated, with job growth having slowed and unemployment having risen but remaining low. The Fed's Chair, Jerome H. Powell, stated that "It's hard to know what to do." (cited by Bloomberg).
The Fed's interest rate has been held at 4.25-4.5% since December 2024, and the decision to cut interest rates was supported by 11 members of the Fed's council. One member, however, argued for a more aggressive 50 basis point cut.
The Fed's decision was made with the aim of achieving "maximum employment" and inflation of 2%, as stated by the Fed. The move is expected to provide some relief to businesses and consumers, who have been grappling with the slowdown in economic activity growth for the first half of 2025.
Powell also indicated that tough decisions regarding further interest rate cuts in the coming months may be necessary, as the Fed continues to navigate the complex economic landscape. The Fed's decision to cut interest rates is a clear indication that the central bank is prepared to take action to support the economy, and investors and businesses will be closely watching for further developments in the coming months.
