WASHINGTON -- The US Federal Reserve on Wednesday decided to lower the target range for the federal funds interest rate by 25 basis points to 4 to 4.25 percent, the first rate cut since December 2024.

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 Federal Open Market Committee (FOMC), the principal monetary policymaking body of the Federal Reserve System, said in a statement after a policy meeting.

"In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4?1/4 percent," the statement said. "In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks."

The FOMC reiterated its commitment to supporting maximum employment and returning inflation to its 2 percent objective.

All 12 members of the FOMC, including Lisa Cook and Stephen Miran, attended the meeting. While 11 members voted for the 25-basis-point cut, Miran voted against the action, preferring a 50-basis-point cut.

On Monday, a US federal appeals court rejected President Donald Trump's bid to remove Federal Reserve governor Lisa Cook, just hours before the Fed's two-day meeting was set to kick off.

Also on Monday, the US Senate narrowly confirmed Stephen Miran, one of Trump's top economic advisers, to serve on the Federal Reserve Board of Governors, succeeding Adriana Kugler who resigned from the board in early August.

Miran was sworn in on Tuesday and is expected to serve through Kugler's remaining term ending on Jan 31, 2026.

Along with its policy decision, the FOMC released updated economic projections, forecasting US real GDP growth of 1.6 percent in 2025, 1.8 percent in 2026, 1.9 percent in 2027, and 1.8 percent in 2028.

The figures are slightly above the June projections of 1.4 percent, 1.6 percent, and 1.8 percent for 2025 through 2027, respectively.

The Fed projected the US median unemployment rate would remain at 4.5 percent in 2025, ease to 4.4 percent in 2026, and decline further to 4.3 percent in 2027.