WASHINGTON, D.C. — In a closely watched move, the Federal Reserve has enacted its first interest rate cut of the year, trimming the benchmark federal funds rate by 25 basis points. The target rate now ranges between 4.00% and 4.25%. This marks the first cut since December 2024.
The Federal Open Market Committee (FOMC) cited slowing job growth and moderating economic activity as primary reasons for the adjustment. While inflation remains above the 2% target (around 2.9%), conditions now lean toward needing greater policy support.
Policymakers signaled that two additional cuts may follow before year-end if current trends continue.
The decision was backed by a broad majority of FOMC members. One dissenting voice came from Board Governor Stephen Miran, a Trump appointee, who argued for a steeper 50-basis-point cut.
The quarter-point cut modestly reduces interest rates on loans, mortgages, and credit cards. While not a dramatic drop, it signals a shift from the Fed’s previous tightening stance.
By predicting two more rate cuts, the Fed appears to be opening the door to a sustained easing period — a pivot toward boosting economic activity.
The decision comes amid heightened political pressure. President Trump has overtly criticized Fed Chair Jerome Powell and demanded larger, faster cuts.
Popular conservative accounts on social media criticized the modest change:
Markets took the cut as a sign of the Fed’s responsiveness to economic softening and political scrutiny. Bond yields fluctuated, and equities rallied modestly.
