Federal Reserve Lowers Interest Rates for Third Consecutive Time

On Wednesday, the Federal Reserve moved forward with an anticipated 25-basis-points rate cut. The latest decision brings the target rate for the federal funds rate to 4.25–4.50%.

This latest reduction follows two previous rate cuts this year: a quarter-point cut in November and a half-point reduction in October. With this latest decision, the Federal Open Market Committee has lowered rates by a full percentage point this year.

In its statement announcing the cut, the Fed projected two additional rate cuts in 2025. It noted that while the unemployment rate remains low, inflation “remains somewhat elevated.” A separate document released by the Fed indicates that the central bank does not expect to reach its 2% inflation target until 2026.