The Federal Reserve has recently cut interest rates by a quarter percentage point, lowering the benchmark rate to a range of 4.00% to 4.25%, marking the first reduction of 2025. This move is anticipated to be the start of a series of cuts aimed at stimulating the slowing labor market and supporting economic growth.
Fed officials project two additional quarter-point rate cuts may happen in the remainder of 2025, probably in the October and December meetings. This would bring the rates down further, potentially close to but above 3.5% by the end of the year. There are mixed opinions within the Fed, with some officials advocating for larger cuts, possibly dropping rates below 3%, while others prefer a more cautious approach.
In summary, interest rates are expected to drop by a total of about 0.75% in 2025, starting with the recent 0.25% cut and potentially two more similar cuts before year-end.
