On Wednesday, the US Federal Reserve made its first interest rate cut since December 2024, trimming the federal funds rate by 25 basis points to a new target range of 4–4.25%. 📉
This move comes as growth in economic activity has slowed, job gains have moderated, and the unemployment rate edged up (though it’s still relatively low). Inflation remains above the Fed’s 2% goal, but the Fed believes this cut strikes the right balance to support maximum employment while guiding inflation down.
At the policy meeting, 11 of the 12 FOMC members backed the 25-basis-point cut. Stephen Miran, who was just sworn in after Senate confirmation, preferred a larger 50-basis-point drop. 🔍 Meanwhile, a recent federal appeals court decision upheld Fed governor Lisa Cook’s position, clearing the way for the meeting without leadership drama.
Alongside the rate change, the Fed released updated projections for real GDP growth and unemployment:
- GDP growth: 1.6% in 2025, 1.8% in 2026, 1.9% in 2027, 1.8% in 2028
- Unemployment: 4.5% in 2025, 4.4% in 2026, 4.3% in 2027
What’s this mean for you? Lower rates can translate to cheaper loans and mortgages—good news if you’re eyeing a new home, planning a startup, or refinancing student debt. But keep an eye on inflation: living costs still feel high in many South and Southeast Asian cities.
Stay tuned as the Fed monitors incoming data and adjusts its strategy to balance risks and keep the economy on track. 🌏💡
Reference(s):
cgtn.com
