The Federal Reserve slashed its interest rates by a further 25 basis points during a meeting on Wednesday. However, the central bank also hinted that further rate cuts will come at a slower pace in 2025.
This was the Fed’s third consecutive rate cut in 2024 and brought the benchmark interest rate to a range of 4.25% to 4.5%. The Federal Open Market Committee made the cut with a split vote with Cleveland Fed president Beth Hammack objecting to the decision.
Hammack’s objection was the second dissent in the current rate-cutting cycle. Governor Michelle Bowman previously voted no for the 50 basis points cut in September, arguing for a 25 basis points cut at the time.
“Today was a closer call, but we decided it was the right call,” Federal Reserve Chair Jerome Powell said at a press conference on Wednesday. “It was the best decision to foster achievement of both of our goals, maximum employment and price stability. “
According to Powell, the Fed is “still on track” to make cuts in 2025 but noted that the officials will need to see further inflation cooling for that to be the case. He added that he doesn’t see any rate hikes happening next year.
The Federal Open Market Committee’s so-called “dot plot,” which provides insights into individual members’ future rate expectations, has shown that only two quarter percentage cuts are likely to happen in 2025. Back in September, the “dot plot” indicated expectations of four rate cuts.