Fed cuts interest rates by a quarter point as outlook to 2025 remains ‘uncertain’

The Federal Reserve on Wednesday cut its key lending rate by a quarter percentage point for the last time this year — but signaled the pace of cuts would slow in the coming year as the central bank steps up efforts to keep inflation in check.

The widely expected quarter-point cut lowered the Federal Reserve’s target rate to between 4.25% and 4.5%.

However, the Fed signaled uncertainty about inflation after a jump in key data over the past two months, saying inflation “has made progress” toward 2% but “remains somewhat elevated.”

“Since the beginning of the year, labor market conditions have generally eased, and unemployment has also declined
The rate has increased but remains low,” he said in a press release.

The Fed stressed that heading into the new year, the economic outlook remains “uncertain.”

In September, the Fed issued a Bigger size, interest rate cut by half a point The cut – the first since 2020 – is based on “greater confidence” that inflation is cooling towards the Bank’s 2% target and that the weak job market poses a greater risk.

The Fed removed its language about “more confidence” Rates cut again in November By a quarter point.

The third cut comes amid mixed economic data. However, the consumer price index showed that inflation appears to be moderating Inflation increased by 2.7% In November – heat output is rising for the second month in a row and above the 2.6% rate seen in October, according to the Labor Department.

Consumer spending remained relatively unaffected. According to the Census Bureau, retail sales increased 0.7% over the same month, exceeding forecasts of 0.6%, and October’s retail sales figure was revised up from 0.4% to 0.5%.

However, the volatile labor market has created some cause for concern as President-elect Donald Trump has called on the Fed to lower rates quickly.

Hiring rates and job opportunities have declined this year, and job growth has slowed in key sectors such as manufacturing, business and professional services.

The Fed is still working to give the US economy a “soft landing” in which both inflation and unemployment remain low without causing a market collapse. But the outlook for 2025 is relatively unclear, especially as some economists worry that Trump’s massive tariff and immigration policies could stoke inflation again.