The US Federal Reserve has made its third straight interest rate cut in its final policy decision for 2024, reducing the key rate by 0.25%, bringing it to a range of 4.25% to 4.50%.
The Fed had previously predicted four cuts in 2025, but now only expects two additional 0.25% decreases.
Core inflation is predicted to fall to 2.5% in 2025, but inflation has decreased and is still higher than the Fed’s 2% target.
Additionally, the Fed updated its 2024 GDP growth projection to 2.5%, although it changed its 2025 unemployment forecast to 4.3%.
The Fed also lowered the rate on its overnight reverse repurchase facility, indicating a more measured monetary easing strategy. The market responded badly to these actions, and Wall Street saw large losses, including the worst day for the S&P 500 since 2001 and the Dow’s longest losing run since 1974.