US Fed lowers interest rate by 0.25% in first cut this year
(VOVWORLD) - The Federal Reserve on Wednesday lowered its benchmark interest rate by 0.25 percentage points — its first cut since December — as the US grapples with a stalling labor market and slower economic growth.
 Fed Chair Jerome Powell (Photo: Reuters) |
Following its policy meeting on Tuesday and Wednesday, the Federal Open Market Committee (FOMC) announced an interest rate cut of 0.25% to between 4 and 4.25%.
The last time the central bank eased borrowing costs was last December, when it also trimmed rates by a quarter of a percentage point.
In a policy statement, FOMC said “the Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen.”
As inflation accelerates, the job market is slowing. That leaves the Federal Reserve in a dilemma over its dual mandate of stabilizing prices and maximizing employment.
Fed Chair Jerome Powell warned that he expects the effects of inflation on goods prices to continue to build through the rest of this year and into 2026. This could affect investors on Wall Street, where many expect the Fed to deliver five rate cuts between now and the end of 2026.