The US Federal Reserve cut interest rates by half a percentage point to the 4.75%-5.00% range, signaling a move towards a gradual easing of monetary policy amid concerns about inflation and the job market, Reuters reports.
Despite inflation still being slightly above the Fed’s 2% target, policymakers are confident that it is moving in the right direction. The Fed’s latest economic projections show inflation decreasing to 2.3% by year-end and 2.1% by 2025, while unemployment is projected to rise slightly to 4.4% by the end of this year. The Fed plans further rate cuts, projecting a full percentage point reduction by the end of 2025 and another half-point in 2026, with rates expected to stabilize at the 2.75%-3.00% range.
Fed Chair Jerome Powell emphasized the decision as a step to maintain labor market strength while achieving moderate growth and lower inflation. Following the announcement, US stocks rose, while the dollar and Treasury yields fell.
