After months of economic debate and mounting pressure from US President Donald Trump, the Federal Reserve is expected to announce its first interest rate cut of 2025 on Wednesday. The central bank is widely anticipated to reduce its key lending rate by 0.25 percentage points, bringing the target range to 4%–4.25%, the lowest level since late 2022.
This move, the Fed’s first rate cut since December 2024, is likely to start a series of reductions aimed at lowering borrowing costs across the country. However, it also signals growing concerns within the Fed about a weakening labor market that requires support through easier monetary policy.
Despite President Trump’s calls for deeper cuts, including rates as low as 1%, the Fed is expected to take a more cautious approach, maintaining its traditional independence from political pressure. Trump has publicly criticized Federal Reserve Chair Jerome Powell on social media, accusing him of holding back economic growth by keeping rates too high for too long.
The decision follows a significant decline in inflation that previously prompted rate hikes in 2022 to combat rising prices after the pandemic. Central banks in the UK, Europe, Canada, and elsewhere have already implemented rate cuts in response to similar economic conditions.
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