Federal Reserve cuts interest rates, trims workforce

The Federal Reserve on Wednesday reduced its benchmark interest rate by a quarter point to a range of 4–4.25%, responding to slowing economic growth and persistently high inflation.

This marks the first rate cut by the central bank in 2025.

Chair Jerome H. Powell said the central bank remains focused on supporting maximum employment while bringing inflation back to its 2% target. He noted that economic conditions remain challenging, with inflationary pressures high and risks to employment rising.

Speaking at a press conference, Powell also revealed that the Fed is reducing its workforce by around 10%. He said that once the cuts are complete, staffing levels will return to roughly what they were a decade ago. While the central bank is open to constructive feedback on improving operations, Powell indicated there is no need for a formal review.

A majority of Fed officials now anticipate at least two further rate cuts this year, though some expressed caution over the timing and scale of additional reductions. Stephen Miran, the newest Fed governor and former economic adviser to President Donald Trump, dissented in the vote, advocating a larger cut.

The decision comes amid ongoing trade and tariff uncertainties, which continue to affect growth and consumer prices. Borrowers are unlikely to see immediate relief, but markets are closely watching for guidance on future monetary policy.

The meeting was marked by unusual circumstances, including legal disputes over Fed appointments and Miran’s Senate confirmation while on leave from The White House. Powell’s post-meeting remarks are expected to clarify the Fed’s outlook for the remainder of 2025.

The move reflects the Fed’s effort to balance economic growth with maintaining price stability in a complex financial environment.

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