US Federal Reserve lowers policy rate 25 basis points in 2nd cut of 2025

​​​​​​​By Mucahithan Avcioglu

ISTANBUL (AA) - The US Federal Reserve slashed its benchmark federal funds rate by 25 basis points Wednesday, between the 3.75% - 4% target range, as widely expected.

It is the second rate cut of 2025, as the bank had held the rate unchanged in the five previous meetings before cutting it at its September meeting.

The Fed said available data suggested that economic activity has been expanding at a moderate pace.

"Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments," said the central bank.

It noted that inflation has moved up since earlier in the year and remains "somewhat" elevated.

The Fed said the Federal Open Market Committee (FOMC), which makes decisions about interest rates, seeks to achieve maximum employment and inflation at the rate of 2% in the longer run.

"The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months," it emphasized.

The Fed said in considering the extent and timing of additional adjustments to the target range for the policy, the FOMC will "carefully" assess incoming data, the evolving outlook and the balance of risks.

"The Committee decided to conclude the reduction of its aggregate securities holdings on December 1," it added.

The decision to lower the rate by 25 basis points was supported by 10 of 12 governors, with Stephen Miran supporting a 50 basis point cut. Jeffrey Schmid voted for no change.

The central bank had kept the rate at the historically high level of 5.5% from July 2023 to September 2024, before gradually lowering it to 4.5% last December.