The rate was lowered by 25 basis points to a target range of 4.25% to 4.50% — a full 1% drop since September. The federal funds rate influences borrowing costs for credit cards, loans, auto financing and, more indirectly, mortgages.
The central bank has been steadily cutting rates to stimulate economic growth in response to signs of a slowing labor market and easing inflation.
The Fed kept rates elevated throughout much of 2023 and 2024 to combat inflation, which peaked at a year-over-year rate of 9.1% in June 2022. Since then, inflation has fallen to 2.7%, bringing it closer to the Fed’s 2% target.
While progress on inflation has stalled in recent months, Fed Chair Jerome Powell expects it to
The Fed cuts interest rates by 25 basis points-here’s what’s cheaper
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