US Federal Reserve cuts interest rate by quarter point

The US Federal Reserve lowered its target range for the federal funds rate by 1/4 per cent to 4 to 4‑1/4 per cent on Wednesday, citing a moderation in economic growth and heightened uncertainty over the outlook. This is the first cut for the US central bank for 2025.

According to the Fed’s statement, recent indicators suggest that economic activity slowed in the first half of the year. Job gains have weakened, and the unemployment rate has edged up slightly, though it remains low. Meanwhile, inflation has increased and remains somewhat elevated.

The Federal Reserve’s Committee highlighted its dual mandate of achieving maximum employment and a 2 per cent inflation rate over the longer term. The Committee noted that downside risks to employment have risen and will carefully monitor incoming data, the evolving economic outlook, and the balance of risks before considering further adjustments to the interest rate.

In addition to the rate cut, the Committee will continue reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities. It reiterated its commitment to supporting maximum employment and returning inflation to the 2 per cent target.

Attribution: Amwal Al Ghad English

Subediting: Y.Yasser