The U.S. Federal Reserve announced a quarter percentage point cut in interest rates, it’s first since December, amid a softening of the U.S. labor market.
The move was expected. The more pressing question for markets was how many additional cuts to expect. The central bank projected two more in 2025. The Fed’s next two meetings are set for October and December. That would bring the benchmark rate down to a range of 3.50% to 3.75% by year-end.
The Dow Jones Industrial Average jumped 465 points on the news. But the tech-heavy Nasdaq and the S&P indexes are lower and markets mixed overall. Fed projections indicated only one increase in 2026, less than pundits anticipated. Fed chief Jerome Powell will give some indication of the central bank’s thinking at a press conference this afternoon.
Media stocks are mostly in positive territory midafternoon with Paramount, Disney, Comcast, TKO and Lionsgate up 1% and Warner Bros. Discovery and Netflix trading up 2%. Fox is 3% higher. Snap, Charter and Sinclair are seeing gains of 4%.
The central bank’s mandate is to balance employment and inflation and it has resisted rate cuts this year amid some drama to get a handle on the impact of Donald Trump’s tariffs on prices. The president has been calling aggressively for lower rates and a more acquiescent Fed. He installed White House adviser Stephen Miran to the Board of Governors, who was sworn in yesterday, and is going after Fed governor Lisa Cook with accusations of mortgage fraud. He was blocked by a judge from firing her.
The Federal Reserve is led by a seven-member Board of Governors. Trump’s efforts to control a body that is meant to operate independently of politics has spooked investors and sent the dollar lower.
“Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated,” the Fed said in its statement today.