Rate Reduction and Economic Projections
The cut its benchmark interest rate by a quarter-point, marking its third cut of the year, but signaled a slower pace of future cuts due to persistent inflation.
Updated projections indicate the Fed expects to cut rates just two or three times in 2025, adjusting from the previously anticipated four cuts, as inflation remains above the 2% target.
Market Reactions and Policy Considerations
The cautious approach towards rate cuts, amidst higher inflation expectations, triggered a significant selloff in the stock market, with the dropping over 1,100 points.
Fed Chairman Jerome Powell emphasized the need for caution in policy adjustments, citing the uncertainty of economic impacts from President-elect Donald Trump's proposed policies as a factor in the decision-making process.