The Federal Reserve announced a quarter-point cut to its key interest rate Wednesday, an effort to keep stable what appears to be a steady but cooling economy.
It’s the central bank’s third rate cut of 2024. The move reduces the Fed’s target rate to between 4.25% and 4.5%.
In its statement announcing the cut, the Fed now projects just two interest rate cuts for 2025. It stated that the unemployment rate remains low, while the rate of inflation “remains somewhat elevated.”
The Fed’s moves are designed to prevent the economy from overheating when growth is strong, or falling into recession when it is slow.
Right now, there is intense debate about which one is more likely to occur going forward.
At the moment, the pace of inflation remains far below its post-pandemic highs. But last week, the Bureau of Labor Statistics reported that the 12-month Consumer Price Index (the most-watched inflation indicator) had climbed 2.7% for the month of November — above the 2.6% pace seen the previous month.