Federal Reserve officials made their third and final rate cut of 2024 today, reducing borrowing costs by a quarter of a percentage point. They also shook up financial markets by forecasting notably higher inflation and two fewer rate cuts in 2025 than they had previously expected.

Stock markets dropped after the Fed announced its projections. The S&P 500 fell nearly 3 percent, its worst day since the beginning of August.

Jerome Powell, the Fed chair, said that the central bank cut rates after each of its last three meetings because inflation had significantly slowed, but that it was a “closer call” this time. He added that he expects the Fed to cut interest rates more slowly next year, because inflation appears to be lingering.

For more: Donald Trump’s vows to cut taxes, impose high tariffs and crack down on immigration have added uncertainty to the economic forecasts.