The Federal Reserve has lowered its benchmark interest rate by 25 basis points, marking its first rate cut in nine months. The move reduces the federal funds rate to a target range of 4.00% to 4.25%.
The decision comes as signs of a cooling labor market emerge and inflation continues to ease, though it remains above the Fed’s 2 percent target. Officials said the cut is intended to support economic growth and prevent further weakness in hiring.
The Fed also signaled that more cuts are likely before the end of the year. Projections released with the decision showed policymakers expect at least two additional reductions if economic data continues to point toward slowing growth and stable inflation.
Lower interest rates are expected to ease borrowing costs for mortgages, auto loans, and business lending. However, savers may see reduced returns on deposits and certificates of deposit.
The central bank cautioned that while it is prepared to continue reducing rates, the pace of cuts will depend on incoming data. If inflation stalls or accelerates, the Fed could slow or pause its plans.
This marks the beginning of a potential easing cycle after a long period of holding rates steady, reflecting the Fed’s shift toward protecting employment while maintaining price stability.
