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The Federal Reserve reduced interest rates by a quarter percentage point Wednesday and scaled back the number of cuts it expects to make next year.
In a split vote, the central bank voted to reduce its benchmark interest rate by 25 basis points to a new range of 4.25%-4.5%, initiating its third consecutive rate cut of 2024 despite signs that inflation isn’t entirely going away.
Newly appointed Cleveland Fed president Beth Hammack objected, preferring not to cut rates. Her dissent marked the second against a policy decision since the Fed started its latest rate-cutting cycle in September.
The consensus among Fed officials is for two rate cuts next year, down from four previously forecast in September.
"Today was a closer call but we decided it was the right call," Powell told reporters at a press conference Wednesday. "It was the best decision to foster achievement of both of our goals," referring to price stability and maximum employment.
"We see ourselves as still on track to cut" in 2025, Powell said, noting that the Fed will need to see further progress on inflation and strength in the labor market. A rate hike in 2025 "doesn’t appear to be a likely outcome."
Ten Fed officials estimated 2 cuts next year, three predicted 1, three said 3 cuts, and one saw 4 cuts.
"In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risk
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2024/12/18
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