Fed lowers rate to 4.00-4.25% and signals two more cuts this year

The Federal Reserve on Wednesday cut its benchmark interest rate by 25 basis points, lowering the federal funds target to a range of 4.00 to 4.25 percent, and signaled it expects two more cuts before year end as officials shifted focus from inflation to a weakening labor market. The move, approved by an 11-to-1 vote at the Federal Open Market Committee meeting in Washington, is the central bank’s first reduction since December and comes amid growing evidence that job growth has slowed and downside risks to employment have risen.

Chair Jerome Powell framed the quarter point reduction as a precautionary, risk‑management step, saying at a postmeeting news conference that “the downside risks to employment appear to have risen.” He added that “there are no risk‑free paths now” and described the outlook as uncertain, underscoring the committee’s intent to remain data dependent. The lone dissenter, newly confirmed Governor Stephen Miran, favored a larger 50 basis point cut.

Officials released updated projections showing a split outlook on the pace of easing. Ten of 19 policymakers penciled in at least two additional cuts this year, while nine projected only one more reduction and a...