News

Fed expected to combine interest rate cut with hawkish 2025 outlook

WASHINGTON (Reuters) -The Federal Reserve is expected to lower borrowing costs on Wednesday in what some observers are calling a "hawkish cut" set to be delivered alongside policymakers' updated interest rate outlooks and economic forecasts covering the first months of the incoming Trump administration. The anticipated quarter-percentage-point move would lower the U.S. central bank's benchmark policy rate to the 4.25%-4.50% range, a full percentage point below where it stood in September when it began easing the tight monetary policy used to counter a surge in inflation that began in 2021. How much further and how fast rates will fall next year remains increasingly uncertain with inflation still lodged above the Fed's 2% target, the economy growing faster than expected, and the prospect that President-elect Donald Trump's tariff, tax and immigration policies could change the economic landscape in unpredictable ways once he takes office in January.