WASHINGTON — On Wednesday, the Federal Reserve cut its third interest rate this year, lowering its benchmark lending rate by a quarter point. This move brings the rate to a two-year low of 4.25% to 4.5%, continuing the central bank’s efforts to reduce borrowing costs that began in September.
Following the decision, policymakers revised their projections for the coming year, now forecasting only two rate cuts in 2025, down from the four they had previously predicted in September. This indicates a more cautious approach toward further monetary easing, which may mean little to no change in loan rates if the Fed sticks with its revised plan.
The central bank also upgraded its economic outlook, predicting slightly stronger economic growth and a modest decrease in unemployment. However, inflation is now expected to be higher than previously anticipated in 2025.
While the Fed’s projections suggest a robust economic outlook without a recession in sight, financial experts have warned that any unexpected surge in inflation could cause the central bank to reconsider its rate-cut strategy. If inflation spikes again, further rate cuts could be postponed or reversed to maintain price stability.
For now, the economy appears poised for continued expansion, with policymakers confident that the outlook remains favorable despite potential challenges ahead.
