🚨🚨Fed’s 0.25% Cut Reflects Tightrope Between Hawks and Doves 🚨🚨
The Federal Reserve cut its key interest rate by 0.25 percentage points, bringing the target range to 3.5%–3.75%. This move, widely anticipated as a "hawkish cut," exposed notable divisions within the Federal Open Market Committee (FOMC).
This split underscores an ongoing debate between the Fed’s "hawks," focused on taming inflation, and "doves," who prioritize supporting economic growth and the labor market.
This latest cut marks the third in a row, but signals from the Fed suggest limited scope for more reductions soon. The "dot plot," illustrating officials’ rate projections, anticipates just one more cut in 2026 and another in 2027, eventually settling near 3%. Meanwhile, the Fed raised its GDP growth forecast for 2026 to 2.3%, even as inflation, currently at 2.8%, is expected to stay above the 2% target until 2028.
In a strategic shift, the Fed will resume purchasing $40 billion in Treasury bills monthly starting this Friday to ease pressures in overnight funding markets, marking a key tactical move after pausing its balance sheet runoff.
