US Federal Reserve Cuts Rates By 0.25 Points, Hints At Two More Reductions As Inflation Stays Elevated And Job Growth Slows

The US Federal Reserve has trimmed interest rates for the first time in months, lowering its benchmark overnight lending rate by 25 basis points to a range of 4.00 per cent–4.25 per cent, and indicated two more reductions could follow before year end, as reported by CNBC.

The move, approved by the Federal Open Market Committee in an 11-1 vote, comes amid mounting concerns over faltering job growth and still-stubborn inflation in the US.

In its statement, the Fed noted that “job gains have slowed” while inflation “has moved up and remains somewhat elevated.”

The combination highlights the challenge of balancing its dual mandate of price stability and full employment.

The committee warned that “uncertainty about the economic outlook remains elevated” and flagged growing downside risks to the labour market.

Fed Chair Jerome Powell emphasised the unusual nature of current conditions.

“The marked slowing in both the supply of and demand for workers is unusual in this less dynamic and somewhat softer labour market,” he said, adding that “the downside risks to employment appear to have risen.”

Powell also described the decision as bringing policy to a “more neutral” stance rather than keeping it moderately restrictive.

US market reactions were mixed. Equities swung between gains and losses, while Treasury yields eased on shorter-term issues but climbed elsewhere.

Indian markets began on a strong note, lifted primarily by a surge in IT counters.

In the opening session, the BSE Sensex rose 447.5 points to 83,141.21, while the NSE Nifty advanced 118.7 points to 25,448.95.

Analysts said the committee’s “dot plot” projections reveal a leaning towards two more cuts this year, most likely at the October and December meetings.

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