By Naman Trivedi

Copyright timesnownews

The US Federal Reserve announced its first interest rate cut of 2025 on Wednesday, lowering the benchmark federal funds rate by 25 basis points from 4.25% to 4.0%. This marks the first adjustment since December and reflects mounting concerns about weakening job creation and broader economic risks. At the latest Federal Open Market Committee (FOMC) meeting, policymakers signaled a potential easing cycle amid a cooling labor market. Job growth slowed sharply over the summer, with employers adding just 27,000 jobs per month on average between May and August, a significant drop from the 123,000 monthly jobs added earlier in the year. The unemployment rate inched up to 4.3%, the highest since 2021. Despite this, inflation remains “somewhat elevated,” with the Consumer Price Index rising 2.9% in August, up from 2.3% in April. The Fed noted that “downside risks to employment have risen,” while also warning that President Donald Trump’s tariffs could lead to a “one-time shift” in prices, though they may also cause more persistent inflationary pressures. The Yale Budget Lab estimates these tariffs could cost households an average of \$2,300 annually. The Fed raised its GDP growth forecast for 2025 to 1.6% from 1.4% in June but left its unemployment and inflation projections unchanged. Policymakers penciled in two more rate cuts this year but showed limited enthusiasm for the deep reductions President Trump has demanded. Only new Fed Governor Stephen Miran, a Trump ally confirmed just before the meeting, dissented, advocating for a larger half-point rate cut. The other 11 members voted for the quarter-point reduction. Miran’s appointment has sparked controversy, including criticism for taking a leave of absence from his White House role rather than resigning. Tensions Between Trump And Fed The Fed’s decision comes amid political tensions, including Trump’s failed attempt to remove Fed Governor Lisa Cook over unproven allegations. Federal courts blocked Cook’s removal, but the White House has appealed to the Supreme Court. Meanwhile, another Biden-appointed Fed governor resigned suddenly in August, leading to Miran’s rapid confirmation. Get Latest News Live on Times Now along with Breaking News and Top Headlines from US News and around the World.