Overview

• The Federal Open Market Committee lowered the federal funds rate to 4.00%–4.25%, its first reduction of 2025 after a multi-meeting hold.
• Officials’ projections point to two more quarter-point cuts this year, with 10 of 19 participants favoring at least that pace and others urging fewer.
• Jerome Powell said downside risks to jobs drove the decision even as inflation ticked higher, with core PCE projected near 3.1% and unemployment around 4.5% by year-end.
• Recent data include a BLS revision removing about 911,000 payrolls over the prior year and an unemployment rate up to 4.3%, underscoring the shift toward labor support.
• Policy paths are diverging globally as the Bank of England held at 4%, and markets had largely priced in the Fed move, implying limited immediate relief for most borrowers.