Federal Reserve Signals Cautious Approach to Further Rate Cuts in 2025

Fed officials emphasize data-driven decisions as inflation remains above target and the economy shows resilience.

Fed Governor Lisa Cook stated that further interest rate cuts will proceed cautiously due to persistent inflation and a strong labor market.
The Federal Reserve has reduced rates by a full percentage point since September 2024, with the current range at 4.25% to 4.5%.
Market projections suggest two or three rate cuts in 2025, with the first half of the year likely seeing minimal adjustments.
Inflation remains slightly above the Fed's 2% target, while unemployment is expected to stay near 4%, influencing the pace of monetary policy changes.
Fed officials highlighted financial stability risks, including private lending growth and potential biases in AI-driven financial tools.