The US Federal Reserve (Fed) cut interest rates by a quarter point and signalled a slower pace of rate cuts. The decision came amid uncertainty over inflation and President-elect Donald Trump's economic plans, AFP reports.
Policymakers voted 11 to 1 to lower the US central bank's key lending rate to between 4.25% and 4.50%, the Fed said.
In their updated economic projections, members of the Fed's rate-setting committee predicted only two quarter-point rate cuts in 2025, down from an earlier forecast of 4, and raised their inflation forecast for next year, from 2.1 percent to 2.5 percent.
Over the past two years, the Fed has made progress in fighting inflation by raising interest rates, and recently began lowering them to stimulate demand in the economy and support the labor market.
But in the past few months, the Fed's preferred measure of inflation has risen, moving away from the bank's long-term target of 2%, and raising concerns that the U.S. central bank's battle is not over.
This is the last planned decision on interest rates before outgoing Democratic President Joe Biden gives way to Republican Donald Trump, whose economic proposals include raising tariffs and mass deportation of millions of illegal immigrants.
Those plans, coupled with a recent rise in inflation data, have led some analysts to reduce the number of rate cuts they expect in 2025. Experts have predicted that interest rates will have to stay higher for longer. | BGNES
