Fed Signals Caution with First Rate Cut Since 2025 Amid Economic Slowdown
The Federal Reserve delivered its first interest rate cut since December 2025, reducing rates by 25 basis points to a target range of 4%-4.25%. The MOVE reflects growing concerns over a softening labor market and moderating economic growth. Chair Jerome Powell noted job gains have slowed while inflation remains stubbornly elevated—a precarious balance for policymakers.
Dissension emerged within the FOMC, with newly appointed Governor Stephen Miran advocating for a more aggressive 50 basis point reduction. The decision exposes fissures in the Fed's outlook: nine officials anticipate two additional cuts this year while six foresee no further easing. GDP growth has decelerated to 1.5% in 2025 from 2.5% last year, driven primarily by weakening consumer spending.
