The US Federal Reserve has cut interest rates by one percentage point three times since last September.
Advertise Federal Reserve The US Federal Reserve on Wednesday cut interest rates for the third straight time in 2024, cutting its benchmark rate by 0.25 percentage points amid falling inflation.
With this measure, the US Federal Reserve has reduced Interest rates, up one percentage point since last September, providing relief to Americans who carry credit card balances and other debt.
The Federal Reserve cut Interest rates The federal funds rate, the interest rate banks charge on short-term loans, was cut to a range of 4.25% to 4.5%, down from the previous target range of 4.5% to 4.75%.
The decision comes after policymakers cut interest rates by 0.5 percentage points in September, followed by a 0.25 percentage point cut in November, Reuters reported.
US Federal Reserve Expects Interest Rate Cut in 2025
At the same time, the Fed now expects to cut interest rates only twice in 2025, down from the four it forecast in September when it released its latest economic forecasts.
The US central bank now expects the federal funds rate to stabilize at an average level of 93.9% by the end of 2025, after its previous forecast of 3.4%.
Goldman Sachs sets expected location for rate cut in 2025
“While the Fed chose to end the year with a third straight cut, its decision for the new year appears to be a more gradual pace of easing,” Whitney Watson, global co-head and global co-chief investment officer for fixed income and liquidity solutions at Goldman Sachs Asset Management, said in an email to CBS News.
“We expect the Fed to choose to skip a rate cut in January, before resuming its easing cycle in March,” he added.
Wednesday’s action represents the Fed’s last decision on interest rates before President-elect Donald Trump’s inauguration on Jan. 20.
Stubborn inflation delays rate cut train
While price increases have eased from their peak in June 2022, opening the door to a Federal Reserve rate cut this year, inflation has remained steady, well above the Fed’s 2% annual target.
Consumer prices rose 2.7% year-on-year in November, driven by higher housing and food costs.
Given this stubborn inflation, many analysts believe the Fed is likely to make fewer rate cuts in 2025, amid concerns that this could overheat the economy.
However, the Fed has so far defied forecasters’ warnings that raising interest rates could trigger a recession.
Next Fed meeting after Trump’s inauguration
The Fed’s first interest rate meeting of 2025 is scheduled for January 28-29, or after.Trump’s inauguration.
About eight in 10 economists expect the Fed to keep interest rates steady at that meeting, according to financial data firm FactSet.
