FED cuts key policy rate by 25 basis points

The US Federal Reserve has cut the federal funds rate by 25 basis points (bps) to 4.25-4.5% per annum. This is stated in the report of the Federal Open Market Committee (FOMC).

“The latest indicators suggest that economic activity continues to grow at a high pace. Labor market conditions have generally improved since the beginning of the year, and the unemployment rate has risen but remains low. Inflation has approached the Committee’s 2% target, but remains slightly elevated,” the statement said.

The Committee is committed to achieving maximum employment and inflation of 2% in the long run.

The FOMC’s decision was in line with the expectations of most analysts and economists. The cut was the third time this year. Fed officials predicted two rate cuts in 2025, compared to the four expected earlier in September.

In addition, the Fed raised its inflation forecast for the United States for 2025 to 2.5% from 2.1% expected in September, and for 2026 – to 2.1% from 2%. The inflation forecast for 2027 was left at 2%.

The US GDP growth forecast for 2025 was revised to 2.1% from 2%. The forecast for 2026 was left at 2%, and for 2027 it was lowered to 1.9% from 2%.

As GMK Center reported earlier, on December 12 this year, the European Central Bank again cut all three key interest rates by 25 basis points (bps). The deposit rate now stands at 3%, the main refinancing rate at 3.15%, and the margin loan rate at 3.4%.