US Fed cuts key rate a quarter point and signals fewer cuts ahead

The U.S. Federal Reserve cut interest rates by a quarter point Wednesday and signaled a slower pace of cuts ahead, as uncertainty grows over inflation and President-elect Donald Trump's economic plans.

Policymakers voted 11 to 1 to lower the central bank's key lending rate to between 4.25 percent and 4.50 percent, the Fed announced in a statement.

This is the final planned interest rate decision before outgoing Democratic President Joe Biden makes way for Republican Donald Trump, whose economic proposals include tariff hikes and the mass deportation of millions of undocumented workers.

These policies, combined with the recent uptick in inflation data, led some analysts to pare back the number of rate cuts they expect in 2025 ahead of Wednesday's meeting, predicting that interest rates will need to remain higher for longer.

All three main indexes in New York were sent spinning, led by a rout in high-flying tech titans.

The S&P 500 fell 2.9 percent, just shy of its biggest loss for the year, to pull further from its all-time high set a couple of weeks ago. The Dow Jones Industrial Average lost 1,123 points, or 2.6 percent, and the Nasdaq composite dropped 3.6 percent.

While inflation has "eased significantly," the level remains "somewhat elevated" compared to the Fed's long-term target of two percent, Chair Jerome Powell said Wednesday.

He added that the Fed was now "significantly closer" to the end of its current easing cycle.

In updated economic forecasts published alongside the rate decision, members of the Fed's rate-setting committee penciled in just two quarter-point rate cuts in 2025, down from an earlier prediction of four, and hiked their headline inflation outlook for next year, from 2.1 percent to 2...