As expected, Federal Reserve Chairman Jay Powell said Wednesday the Fed board voted to cut its benchmark interest rate after two days of meetings.
The Fed lowered its benchmark federal-funds rate by 0.5% to a range between 4.75% and 5%. The federal-funds rate sets short-term borrowing costs for banks and provides the basis for numerous consumer loan interest rates including mortgages, auto loans and credit cards.
The Fed’s statement announcing the decision said, “The committee has gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in balance.”
Analysts expected the Fed to cut rates, with most experts predicting a 0.5% decrease. Powell said the Fed is trying to restore price stability without a painful increase in unemployment.
“That is what we are trying to do,” he said, “and I think you could take today’s action as a sign of our strong commitment to achieve that goal.”
The Fed’s forecast, known as the “dot plot,” indicated an expected 0.5% additional cut before the end of the year, 1% in 2025 rate cuts and 0.5% in 2026 rate cuts. Together, the moves would lower the federal-funds rate to a range between 2.75% and 3% in 2026.
