U.S. stocks experienced a decline following an anticipated interest rate cut by the Federal Reserve.
The Fed reduced rates by 25 basis points, bringing them to a range of 4.25%-4.50%.
Despite this cut, the central bank’s economic projections indicated a slower pace of cuts in the coming year.
According to the Fed’s summary of economic projections, rate cuts are expected to total half a percentage point by the end of 2025, influenced by a strong labor market and stagnant inflation.
Traders were particularly attentive to comments from Fed Chair Jerome Powell regarding future interest rate moves.
Tariff worries
Brian Jacobsen, Chief Economist at Annex Wealth Management, noted early concerns about tariffs might be affecting the Fed’s forecasts, predicting fewer rate cuts in 2025, a slight rise in inflation, and an increase in the unemployment rate.
Jacobsen also mentioned that the Fed could afford a slower pace of cuts due to robust economic conditions.
The market reaction was negative, with the Dow Jones Industrial Average falling by 105.67 points, or 0.25%.
The S&P 500 dropped 28.31 points, or 0.46%, while the Nasdaq Composite decreased by 109.43 points, or 0.55%.
