Federal Reserve Announces Interest Rate Cut
(MENAFN) The U.S. Federal Reserve on Wednesday announced a 25 basis point reduction in the federal funds rate, lowering the target range to 4 to 4.25 percent—marking its first rate cut since December 2024.
In a post-meeting statement, the Federal Open Market Committee (FOMC) highlighted a moderation in economic growth during the year's first half, with job gains slowing and a slight uptick in the unemployment rate, though it remains low. Inflation "has moved up and remains somewhat elevated," the central bank noted.
The FOMC explained, "In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4 1/4 percent." It added, "In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks."
The committee reaffirmed its dedication to fostering maximum employment and bringing inflation back to its 2 percent target.
All 12 FOMC members, including newly sworn-in Stephen Miran and Federal Reserve governor Lisa Cook, participated in the meeting. Eleven members supported the quarter-point cut, while Miran dissented, advocating for a larger 50 basis point reduction.
Earlier in the week, a U.S. federal appeals court rejected President Donald Trump’s attempt to remove Fed governor Lisa Cook just hours before the Fed convened for its two-day session. Additionally, the Senate narrowly confirmed Miran, a close Trump economic adviser, to fill the board seat left vacant by Adriana Kugler’s August resignation. Miran was sworn in Tuesday and will serve through Kugler’s term, ending January 31, 2026.
Alongside its rate decision, the FOMC updated economic forecasts, projecting U.S. real GDP growth at 1.6 percent in 2025, 1.8 percent in 2026, 1.9 percent in 2027, and 1.8 percent in 2028—slightly higher than June’s estimates. The Fed anticipates the median unemployment rate to hold steady at 4.5 percent in 2025, easing to 4.4 percent in 2026, and dropping further to 4.3 percent by 2027.
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