The Federal Reserve Board cut a key U.S. interest rate 0.25% on Wednesday. The Federal Funds Rate now sits at 4.25-4.50%
The cut was widely expected but future cuts are in jeopardy because of stubborn inflation numbers and strong employment numbers.
The Fed projected that there will only be two interest rate cuts in 2025, down from the four that were previously expected. The number of rate cuts for 2026 was also cut from four to two.
The Fed has made significant progress tackling inflation and recently began cutting rates in a bid to boost demand in the economy.
But in the past few months, the Fed's favored inflation has ticked higher.
"Inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated," the board said in announcing the rate cut.
One board member voted against the cut. Beth M. Hammack preferred to maintain the target range for the federal funds rate at 4-1/2 to 4-3/4%.
Stock prices fell after the rate cuts and the down turned negative, putting it in jeopardy of falling for the tenth day in a row.
"The economy is strong overall," Chairman Jerome Powell said at a news briefing to explain the board's thinking moving forward.
"Our policy stance is now significantly less restrictive," he said. "We can therefore be more cautious as we consider further adjustments to our policy rate."
He said they were concerned about cutting too slow or too fast and its effect on the economy.
Powell noted that longer term rates like auto and mortgage rates have been rising because the U.S. economy has been performing so well.
"The outlook is pretty bright for our economy," Powell said.
