The Federal Reserve has cut interest rates for the third time in a row in its latest meeting. On Wednesday, the central bank announced a 0.25% cut in rates. Now the main interest rates have come in the range of 4.25% to 4.5%. This decision was taken by a vote of 11-1, in which 11 members were in favor of the cut, while one member advocated keeping the rates stable.

New plans for 2025 and 2026

The Fed has indicated that an additional cut of 0.5% in total can be made in two times in 2025. With this, rates can come between 3.75% to 4% by the end of 2025. A cut of half a percent is also likely in 2026.

Inflation and growth forecast

Fed policymakers believe that the economy will grow rapidly in 2025, but inflation may also increase.

Inflation rate: Personal consumption expenditure (PCE) based inflation is estimated to be 2.5% by the end of 2025, up from 2.1% earlier.
Core inflation: Core inflation is estimated to be 2.5% for 2025, up from 2.2% earlier.
Unemployment rate: The unemployment rate may be 4.3% by the end of 2025, up from 4.4% in September.
GDP growth: GDP growth may be 2.1% in 2025, up from 2% earlier.

Powell's confidence: Economy is strong

After the announcement of the policy, Federal Reserve chief Jerome Powell expressed confidence that the economy is moving forward strongly. He said, "Inflation rate is close to the target of 2%. The economy has made rapid progress in the last two years. Necessary steps are being taken to balance employment and inflation."

Why is this decision important?

This decision of the Federal Reserve is also important for the global economy. Reduction in interest rates will not only support the US economy but will also boost investment and growth. However, controlling inflation will remain a big challenge.

It is worth noting that this strategy of the Fed shows that it is trying to strike a balance between economic stability and growth. The whole world will keep an eye on its impact in the coming times.