The U.S. Federal Reserve on Wednesday cut the benchmark policy rate by 25 basis points to the range of 4.25%-4.50%, as widely expected.
A total of 11 members of the Federal Open Market Committee (FOMC) voted in favor of the decision, while only one member, Beth M. Hammack, dissented, maintaining that rates shoulf be kept unchanged.
While the economy continues to grow at a steady pace, labor market conditions have eased. Unemployment, while still low, has ticked up slightly, the bank said in a statement.
Inflation has moved closer to the Fed’s 2% target but remains elevated, it also stressed.
The Fed emphasized its commitment to balancing risks and achieving its dual goals of maximum employment and stable inflation.
Future rate adjustments will depend on incoming data and evolving economic conditions, it added.
According to the latest data, headline inflation in the U.S. rose for a second consecutive month to 2.7% in November.
The Fed signaled through its closely watched “dot plot,” which shows individual members’ rate forecasts, that it likely plans to cut rates only twice more in 2025.
In projection materials released after its latest meeting, the Fed revised up its GDP growth forecast for 2024 to 2.5% from 2%.
The bank has slashed borrowing costs by a full percentage point since initiating the gradual relaxation of its tight monetary policy in September.