ExclusiveFederal Reserve Cuts Rate by 25 Base Points and Signals Two More Cuts This Year

The Federal Reserve cut interest rates by a quarter of a percentage point on Wednesday and indicated it will steadily lower borrowing costs for the rest of this year. The cut, the first move by the policy-setting Federal Open Market Committee since December, moves the policy rate to the 4.0% to 4.25% range. The committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen, the Fed said in its policy statement. Job gains have slowed and the unemployment rate has edged up. Only new Governor Steven Miron, who joined the Fed on Tuesday and is on leave as the head of the White House's Council of Economic Advisers, dissented in favor of a half-percentage-point cut. Fed officials also signaled that they expect to reduce their key rate twice more this year, but just once in 2026. The rate cut and projected future cuts indicate Fed officials are now more concerned about weakening growth and the likelihood of rising unemployment. They previously were concerned about the potential inflation pressure from Trump's trade policies.