US Federal Reserve Approves Third Interest Rate Cut of 2025
According to the Economic Desk of Webangah News Agency, the focus now shifts to the future path of the Federal Open Market Committee following the third consecutive rate cut approved on Wednesday, with limited room remaining for further reductions.
The closely watched “dot plot” of officials’ rate expectations indicates one rate cut in 2026 and another in 2027 before the federal funds rate reaches a long-term target of around three percent. These projections remained unchanged from the September update, but the dot plot revealed disagreement within the committee regarding the direction of rates.
Regarding the economy, the committee revised its collective view of GDP for 2026, increasing its September forecast by half a percentage point to 2.3%. The committee continues to expect inflation to remain above the central bank’s 2% target through 2028.
On inflation, prices remain stubbornly high, with the Federal Reserve’s preferred measure showing an annual rate of 2.8% in September, the latest month for which data is available. While this figure is significantly lower than its peak in previous years, it remains well above the central bank’s 2% target.
Federal Reserve officials have been operating in an environment where much of the official data used in their decision-making has either been delayed or completely missing due to the government shutdown, which lasted until November 12.
Data reviewed suggests the labor market is in a space with low hiring and low layoffs, with employers reluctant to increase the number of workers or lay off large numbers, according to a CNBC report. However, recent signs from unofficial data suggest a sharper decline in wages is on the horizon, with announced layoffs reaching 1.1 million through November, according to employment firm Challenger, Gray & Christmas.
