The Federal Reserve lowered its key interest rate by a quarter of a percentage point to a range of 4.25% to 4.5%, the lowest since February 2023, as widely expected. The move aims to boost the economy and prevent a severe rise in unemployment.
A lower fed funds rate reduces borrowing costs on all kinds of loans, which is expected to have a positive impact on the economy. However, Fed officials indicated that future rate cuts may be fewer and further between due to stubborn inflation remaining above the 2% annual target.
The decision marks the third rate cut in as many meetings of the Fed’s policy committee since September, when rates were reduced from two-decade highs. The Fed aims to achieve a “soft landing” by bringing inflation under control without causing a recession.
While analysts predict that borrowing costs may remain steady for at least the next couple of months, some experts believe that future rate cuts may be delayed due to the ongoing inflation concerns. Fed Chair Jerome Powell stated that the decision was made to balance the risks of moving too quickly or slowly in addressing both maximum employment and price stability.
Source: https://www.investopedia.com/federal-reserve-fed-meeting-december-8763483