The US Federal Reserve (Fed) has decided to cut benchmark interest rates in the United States. The decision was already expected by the market, which, however, had doubts about the extent. The reduction ended up being only 25 basis points, placing the range between 4% and 4.25%.

The expectation surrounding this cut is due to the weakness in the labor market, but also because inflation accelerated again in August, reaching a seven-month high. And the Fed has two mandates: full employment and price stability, with a 2% inflation target.

"Recent indicators suggest that economic growth moderated in the first half of the year. Employment growth slowed and the unemployment rate rose slightly but remains low. Inflation rose and remains somewhat elevated," the statement read, in which the Fed emphasized that"uncertainty regarding the economic outlook remains high."

The decision to cut by 25 basis points was not, however, unanimous. Governor Stephen Miran—who was recently chosen by President Donald Trump to serve on the board—voted in favor of a jumbo reduction of 50 basis points.

Looking ahead, the dot plot—a quarterly map showing how each central bank official estimates interest rate changes—indicates more cuts this year and next. Average projections point to rates of 3.6% at the end of this year (down from 3.9% in June) and 3.4% next year (up from 3.6% previously).

In its new economic projections, also updated this Wednesday, the institution led by Jerome Powell forecasts gross domestic product (GDP) growth of 1.6%, two tenths above the figure announced in June. Regarding inflation, measured by the consumer expenditures (PCE) price index, expectations remain at 3% for this year, but are two tenths lower compared to June for 2026, with the Fed now projecting a figure of 2.6%.

"In considering further adjustments to the federal funds rate range, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks," it emphasizes, adding that it is"prepared to adjust the stance of monetary policy, as appropriate, should risks emerge that could prevent the objectives from being achieved."

The Fed began its interest rate easing cycle in September of last year, making three cuts totaling 100 basis points (one percentage point) by the end of the year. Until now, it had opted to remain on pause in 2025.