The U.S. Federal Reserve has lowered its benchmark interest rate by 0.25 percentage points, marking its first rate cut since December, as Chair Jerome Powell addressed growing concerns about a weakening labor market and persistent inflation. Reuters
The new range for the federal funds rate now stands at 4.00%–4.25%. Powell emphasized that although pressures from policies like immigration and tariffs are being monitored, the labor market’s slower growth is a key driver behind this decision. He also clarified that there was no consensus for a larger half-point cut during the meeting. Reuters
Looking ahead, the Fed has signalled the likelihood of two more interest rate cuts in the remainder of 2025, depending heavily on incoming economic data. The policy stance remains cautious: while easing is expected, Powell insisted that cuts are not on a preset path. Reuters
Investors are reacting with caution. Although the rate reduction was widely anticipated, Powell’s remarks have tempered optimism, especially given inflation remains elevated and the housing sector continues to show resistance to short-term rate changes. Reuters
