Federal Reserve Cuts Interest Rates
The Federal Reserve recently reduced the benchmark interest rate by 0.25 percentage points, the third consecutive interest rate cut of 2024.
The reduction takes the federal funds rate, the interest rate banks charge each other for short-term loans, to a target range of 4.25%-4.5%, down from its previous target range of 4.5%-4.75%. The change comes after the rate-setting Federal Open Market Committee (FOMC) reduced rates by 0.5 percentage points in September, followed by a reduction of 0.25 percentage points in November.
Additionally, the Fed is now penciling in just two rate cuts in 2025, down from the four it had forecasted in September. The Fed is now projecting that the federal funds rate may end up at a median level of 3.9% by the close of 2025, which is higher than its earlier forecast of 3.4%.