The Fed has cut the main rate by a half point, voicing confidence inflation is falling. 

The Federal Reserve on Wednesday cut the main interest rate by a half percentage point to a range between 4.75% and 5%, citing progress in slowing inflation toward the central bank’s 2% goal from more than 9% two years ago.

“The committee has gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the Federal Open Market Committee said in a statement. Central bank officials expect to trim the federal funds rate to 4.4% by December and to 3.4% by the end of next year, according to the median of their projections released Wednesday.

Fed officials forecast that inflation as measured by the core personal consumption expenditures price index, excluding food and energy, will end 2024 at 2.6%, the same level as July, and at 2.2% by the end of next year, according to their median projections. They see unemployment rising from 4.2% in August to 4.4% in December.

Fed policymakers weeks ago signaled the cut to borrowing costs by noting that, after focusing for more than two years on their mandate to ensure stable prices, the cooling job market had prompted them to turn more to their other congressional directive of promoting maximum employment.

Payroll growth has slowed this year, while unemployment rose to 4.2% last month from 3.7% in December as more workers entered the labor force and companies trimmed hiring plans.

Before the Fed’s Wednesday decision, economists and Wall Street analysts were split over whether policymakers would cut by a half point, to forestall a downturn and widespread unemployment, or by a quarter point, to minimize the odds of a resurgence in price pressures.

This is a developing story. Read more on our website for live updates.