The Federal Reserve cut interest rates on Wednesday for the first time in 2025.
The Federal Open Market Committee (FOMC) said in a statement, “Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated.”
“In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4‑1/4 percent,” the statement added, noting that the Committee’s goal is to achieve a 2 percent inflation rate.
“Voting against this action was Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting,” the statement read.
Peter Navarro, President Trump’s senior counselor for trade and manufacturing, told Fox News’ “Mornings with Maria” that the rate cut should be “50 [basis points cut] today, and it should be another 50 at the next meeting. That’s where it should be.”
Last month, the Federal Reserve ended its 2020-era policy that allowed inflation to run above 2 percent, a move intended to restore credibility and simplify its economic framework.
The updated policy statement returned to a traditional 2 percent inflation target and adjusted language around employment, no longer framing deviations from maximum employment as “shortfalls.” Instead, it acknowledges that job growth above perceived sustainable levels does not automatically trigger inflation, allowing more flexibility in labor market responses.
