Fed cuts rates by 25 basis points and signals further easing

The Federal Reserve cut interest rates by 25 basis point on Wednesday and indicated it will steadily lower borrowing costs for the rest of this year, as policymakers responded to concerns about weakness in the job market in a move that won support from most of President Donald Trump’s central bank appointees.

Only new Governor Stephen Miran, who joined the Fed on Tuesday, voted for 50 basis points cut.

The cut, the first move by the policy-setting Federal Open Market Committee since December, moves the policy rate to the 4.00%-4.25% range.

The rate cut, along with projections showing two more 0.25% reductions are anticipated at the remaining two policy meetings this year, indicate Fed officials have begun to downplay the risk that the administration’s trade policies will lift inflation, and are now more concerned about weakening growth and the likelihood of rising unemployment.

The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen, the Fed said in its policy statement. Job gains have slowed, and the unemployment rate has edged up.

New economic projections showed policymakers at the median still see inflation ending this year at 3%, well above the central bank’s 2% target, a projection unchanged from the Fed’s last set of forecasts published in June. The projection for unemployment was also unchanged at 4.5% and economic growth slightly higher at 1.6% versus 1.4%.