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May 15, 2025
On December 18, 2024, FED reduced the federal fund rate by 25 basis points, setting it 4.25% to 4.50%. This is the third rate cut this year.
Despite the reduction, the Fed signaled a more cautious approach for 2025. Responding to a journalist's question, Powell stated, "The median forecast shows two cuts next year compared to four in September." This statement had a notable impact on financial markets, causing the Dow Jones Industrial Average to decline.
In the FOMC statement, it was emphasized that, "The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective." Powell highlighted that, while progress has been made, further efforts are necessary to achieve price stability without harming economic growth.
The Fed’s announcement of two rate cuts next year negatively affected mortgage rates, which rose for two consecutive weeks. This was in contrast to a slight decline seen at the beginning of December.
The Fed's policy shift caused some disappointment for those who had expected mortgage rates to fall significantly next year.
Propbee Economics Team
May 15, 2025
On December 18, 2024, FED reduced the federal fund rate by 25 basis points, setting it 4.25% to 4.50%. This is the third rate cut this year.
Despite the reduction, the Fed signaled a more cautious approach for 2025. Responding to a journalist's question, Powell stated, "The median forecast shows two cuts next year compared to four in September." This statement had a notable impact on financial markets, causing the Dow Jones Industrial Average to decline.
In the FOMC statement, it was emphasized that, "The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective." Powell highlighted that, while progress has been made, further efforts are necessary to achieve price stability without harming economic growth.
The Fed’s announcement of two rate cuts next year negatively affected mortgage rates, which rose for two consecutive weeks. This was in contrast to a slight decline seen at the beginning of December.
The Fed's policy shift caused some disappointment for those who had expected mortgage rates to fall significantly next year.
Propbee Economics Team
