Federal Reserve cuts interest rates by quarter-point, more to come in 2025

The Federal Reserve announced Wednesday that it approved a quarter-point interest rate cut, its first cut in nine months and a baby step toward President Donald Trump’s demands for rates to be cut quickly and aggressively.

The proposal passed 11-1, placing the benchmark overnight lending rate in a range between 4.00-4.25%. The dissenting vote on the 12-member Federal Open Market Committee came from Governor Stephen Miran, the body’s newest member. The Trump appointee advocated for a half-point cut instead.

Wall Street widely expected the quarter-point cut, with CME FedWatch showing the rate probability at nearly 95% on Monday.

In a statement, the FOMC cited indicators of economic stagnation this year, including slowing job gains, rising unemployment and high inflation levels, as a main motivation for the cut. 

The committee will continue to monitor “readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments” and said it is prepared to adjust based on these indicators, if necessary.

Since taking office, President Trump has pressured the Fed to slash rates, but the board has resisted based on concerns around tariffs and their effect on inflation. Trump has repeatedly criticized Fed Chair Jerome Powell’s leadership, nicknaming him “Too Late” in a Truth Social post ahead of Wednesday’s announcement.

Trump is now asking the Supreme Court for permission to fire Fed Governor Lisa Cook. A federal appeals court previously ruled against his bid to remove Cook, setting up a legal fight that poses a threat to the body’s independence. No president has ever attempted to remove a Fed governor.

A dot plot released by the FOMC projects two more cuts will take place before the end of the year. Its next meeting is slated for Oct. 28-29, with the final meeting of 2025 to be held in early December.