On Wednesday, the U.S. Federal Reserve made its first interest rate cut since December 2024, lowering the federal funds target range by 25 basis points to 4-4.25%. The move comes amid signs of moderating economic activity: job gains have slowed, unemployment has edged up (though it remains low), and inflation is still somewhat elevated.
In its statement, the Federal Open Market Committee (FOMC) said that "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." The FOMC emphasized it will "carefully assess incoming data, the evolving outlook, and the balance of risks" before making further adjustments.
All 12 members of the FOMC attended the meeting, including governor Lisa Cook and new appointee Stephen Miran. While 11 members backed the 25-basis-point cut, Miran voted for a steeper 50-basis-point reduction.
The rate decision followed two key developments locked in just before the meeting: a U.S. appeals court rejected President Trump's bid to remove Governor Cook, and the Senate narrowly confirmed Stephen Miran to fill a vacant seat, extending through January 31, 2026.
Alongside the rate cut, the FOMC released updated economic projections, forecasting U.S. real GDP growth of 1.6% in 2025, rising to 1.8% in 2026 and 1.9% in 2027, before settling at 1.8% in 2028. Unemployment is projected to hover at 4.5% in 2025, easing to 4.4% in 2026 and 4.3% by 2027.
With this policy shift, global investors, business leaders, and young entrepreneurs will be watching how lower borrowing costs and fresh economic forecasts reshape markets, hiring trends, and growth strategies in the months ahead.
Reference(s):
cgtn.com
