Fed Reduces Interest Rates by 0.25% Again
The Federal Reserve has again reduced interest rates, lowering them by 0.25%. This change marks a significant moment in U.S. monetary policy, reflecting the ongoing economic conditions.
Key Developments from the Federal Reserve Meeting
During a recent meeting, the Federal Open Market Committee (FOMC) voted 9-3 to decrease the interest rate range to between 3.5% and 3.75%. This reduction follows an earlier range of 3.75% to 4% set in October.
Dissent from Within the Fed
- For the first time since September 2019, three officials disagreed with the decision.
- Fed Governor Stephen Miran advocated for a reduction of half a point.
- Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid preferred maintaining the current rate.
Future Expectations
The Fed’s projections indicate a cautious approach ahead. According to the “dot plot,” only one additional quarter-point cut is anticipated in 2026, with another expected in 2027. By that time, the target funds rate should fall between 3% and 3.25%.
Changes in Fed Communication
The Fed’s recent statement highlighted that it would evaluate the extent and timing of further interest rate adjustments. This language mirrors the communications used by the central bank in December 2024, after which no further cuts were made until September.
Donald Trump’s Critique of the Fed’s Decision
Former President Donald Trump openly criticized the Federal Reserve’s latest decision. He expressed that the quarter-point cut should have been at least double that amount.
- Trump referred to Fed Chair Jerome Powell as “a stiff” and “a dead head.”
- He believes that the Fed’s actions might hinder economic growth.
Trump stated, “We have to get a mindset that when a country is doing well, you don’t want to kill the growth. That’s what the Fed is doing.”
