The Federal Reserve on Wednesday lowered its benchmark interest rate by 0.25 percentage points — its first cut since December — as the U.S. grapples with a stalling labor market and slower economic growth. The Fed cut reduces the federal funds rate — what banks charge each other for short-term loans — to between 4% and 4.25%, down from its prior range of 4.25% to 4.5%.
The last time the central bank eased borrowing costs was in December 2024, when it also trimmed rates by a quarter of a percentage point.Federal Reserve officials are also penciling in two more rate cuts in 2025, but only one in 2026, according to the central bank's summary of economic projections.
That may disappoint Wall Street, with investors before the meeting projecting a total of five cuts over the rest of the year and 2026.According to those median projections, Fed officials expect the nation's unemployment rate, currently 4.3%, to reach 4.5% by year-end before ticking down to 4.4% in 2026 and 4.3% the following year. Personal Consumption Expenditures (PCE) — the Fed's preferred gauge of inflation — is forecast to level off at 3% this year, well above the central bank's 2% annual target, before receding to 2.6% next year and 2.1% in 2027.
The median projections for core inflation, which strips out volatile food and energy…
Published: September 17, 2025 6:01 pm
Source: CBS News — Read original