Tashkent, Uzbekistan (UzDaily.com) — The U.S. Federal Reserve (Fed) has announced a 0.25% reduction in its key interest rate as part of its strategy to support economic growth.

However, Fed officials have indicated that the pace of rate cuts in 2025 could be slower than previously expected. These developments triggered significant volatility in the financial markets, including a sharp decline in stocks.

Following the announcement, the Dow Jones index dropped by 1,100 points, marking the largest single-day drop in months. According to AP News, investors are concerned about the economic outlook and the slower-than-expected pace of future rate cuts.

Financial analyst Michael Hewson from Reuters stated: "The Fed is trying to balance its policy by supporting economic growth while keeping inflation at an acceptable level. This is a difficult task, especially in the face of global economic instability."

According to Financial Times, Fed officials emphasized that the U.S. economy is showing resilience despite global challenges. However, Fed Chairman Jerome Powell said: "The rate cut should not be seen as a signal for aggressive stimulus. We will approach future decisions cautiously, considering macroeconomic data."

Experts from CNBC added that the Fed’s primary goal remains to reduce inflation to 2%. However, the ongoing high cost of borrowing could limit growth in sectors dependent on credit, such as real estate and automotive.

In its 2025 forecast, the Fed expects fewer rate cuts than previously anticipated. This is due to the need to maintain economic stability amid global challenges such as geopolitical instability and energy market volatility.

Many investors are revising their strategies. Financial advisor Mark Wilson told Bloomberg: "This news is making market participants more cautious. Some are starting to look for safe assets like gold and bonds, which is also influencing market dynamics."

The Fed’s actions signal the complex challenges facing the U.S. economy. The regulator’s policy aims to strike a balance between growth and controlling inflation, but this does not rule out further difficulties for financial markets.

As CNBC notes, experts advise investors to remain cautious and monitor economic data that may affect future Fed decisions.