The Federal Reserve's decision could potentially mark an economic milestone for Americans battling higher cost of living.

President Joe Biden is celebrating the Federal Reserve’s decision to lower interest rates by saying it shows that inflation has eased.

Some forecasters expect the Fed to cut interest rates by a quarter-point Wednesday. Most, however, expect a half-point reduction. The CME FedWatch forecast tracker favored a half-point cut by a 55-45 margin at midday. (Earlier Wednesday, forecasters rated the probability of a half-point reduction even higher.)

The federal funds rate is the interest banks charge each other for overnight loans. Set by the Federal Reserve, it's a basis for other interest rates.

The Federal Reserve on Wednesday cut its benchmark interest rate by an unusually large half-point, a dramatic shift after more than two years of high rates that helped tame inflation but also made borrowing painfully expensive for American consumers.

Their latest update, published on September 18th, revealed that their views on long-term interest rates are the most dispersed since the Fed started publishing these “dot plot” projections in 2012. Of the 19 officials who made forecasts (the committee’s 12 voters plus seven regional Fed presidents),

Q: Did the Federal Reserve go too far with its half-point reduction? NO: Too much is being made of the half-point reduction. The labor market is cooling, inflation is coming down, and monetary policy works with a lag.

Fed Governor Bowman warns against interpreting rate cuts as signs of economic weakness, stressing the risks of stoking inflation with rapid cuts. Read what investors need to know.

For the first time in four years, the Federal Reserve has cut interest rates. Last week, they lowered rates by a half percentage point– which is double from the usual .25 percentage point cut. The cut lowers the federal funds rate into a range between 4.