Federal Reserve cuts key rate for first time this year

The Federal Reserve cut its key interest rate by a quarter-point to 4.1% on Wednesday, marking its first cut since December. This decision was driven by concerns about the labor market's health, as hiring has slowed and unemployment has risen. Fed Chair Jerome Powell emphasized that the focus was on labor market risks, and the Fed projected two more rate cuts this year. However, Powell did not commit to rapid cuts, disappointing some investors who had anticipated more. The decision was not unanimous, with one policymaker, Stephen Miran, advocating for a larger half-point cut. The Fed's projections indicated a split among officials, with some favoring no further cuts and others supporting multiple cuts. Powell acknowledged the uncertain economic outlook, noting the unusual combination of weak hiring and elevated inflation. Meanwhile, President Donald Trump's attempt to fire Fed governor Lisa Cook has raised concerns about the Fed's independence. The Fed's rate cut contrasts with other central banks, such as the European Central Bank and the Bank of England, which have kept their rates unchanged.