The Federal Reserve warned it would be cautious about more interest cuts in the face of inflation concerns.

Summary

US stocks fell sharply after the Federal Reserve cut interest rates for the third time but signaled fewer cuts in 2025 due to persistent inflation.

The Fed reduced its key rate to 4.25%-4.5%, citing progress on price stabilization but warned of slower action ahead.

Markets reacted negatively, with the Dow, S&P 500, and Nasdaq all posting significant declines.

Analysts raised concerns about inflationary risks tied to rate cuts and incoming Trump administration policies, such as tax cuts and tariffs.

Forecasts now project higher inflation and borrowing costs into 2025.