When Will The Fed Cut Interest Rates?

2025-05-16 09:20:00 ET

Summary

• The latest data from the Bureau of Labor Statistics confirm that the Federal Reserve has made a lot of progress on inflation.
• The Fed should seek to avoid its recent mistakes and keep nominal spending on a stable trajectory.
• FOMC predicts rates will be 50 basis points lower by the end of 2025.

By William J. Luther

The latest data from the Bureau of Labor Statistics confirm that the Federal Reserve has made a lot of progress on inflation. The Consumer Price Index (CPI) grew 2.3 percent over the past year. It has grown at an annualized rate of just 1.6 percent over the past three months. Despite this progress, however, Fed officials voted to hold the federal funds rate target range at 4.25 to 4.5 percent last week....

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