The Federal Reserve on Wednesday made another cut in interest rates, but, signaling what its leader called a new phase in policy, the central bank dialed back expectations for lowering rates in the near future.

Earlier plans for several more rate cuts in 2025 have become muddied as progress the Fed made on curbing inflation has stalled. And uncertainties abound about what impact the incoming Trump administration will have on the economy, especially if it pushes through tax cuts and tariffs, which could increase prices for businesses and consumers.

Stocks plunged after the Fed announced its quarter-point rate reduction and updated projections, which halved the number of rate cuts for next year. And comments by Fed Chair Jerome Powell at a news conference didn't assuage investors. The Dow fell 1,123 points, or 2.6%, and other indexes were down even more in percentage terms, in one of the biggest losses of the year.

Powell said the U.S. economy overall was "performing very, very well," with resilient consumer spending and a solid, if gradually cooling, labor market. But he also said that "uncertainty around inflation is actually higher" and that the Fed was in a new phase where it is being more cautious about cutting rates.

"It's kind of common sense thinking that when the path is uncertain, you go a little bit slower," he said. "It's not unlike driving on a foggy night or walking into a dark room full of furniture. You just slow down."

Wednesday's rate cut was the third in a row and had been widely expected. It will give consumers a bit more relief on interest payments for credit cards, home equity lines and some other personal loans.

The cumulative effects of the three rate cuts since September, totaling a full percentage point, are more meaningful and could help households that are stretched financially. More Californians have fallen behind in making debt payments this year, with delinquency rates on credit cards and auto loans rising especially for millennials (ages 28-43), according to the California Policy Lab at UC Berkeley.

The Fed's recent rate cuts, however, haven't done a whole lot for potential homebuyers and sellers. The 30-year fixed mortgage rate, while ticking down a little this month, most recently stood at 6.6% last Thursday — which is actually up from about 6% in mid-September, according to Freddie Mac. And analysts don't see mortgage rates coming down significantly in the near term.

Mortgage rates more closely track long-term bond yields, which have risen notably this month. And it jumped after the Fed's announcement Wednesday afternoon, reflecting in part concerns about higher inflation.

That's not good news for Southern California's housing market. "Younger people may be locked out of ownership experience that other generations had, which is disconcerting," said G.U. Krueger, an independent housing economist in Los Angeles.

While Wednesday's rate cut was expected — futures markets gave it a 95% probability before the announcement — the view ahead is clouded by uncertainty over what President-elect Trump might do, on trade as well as fiscal policy.

Powell acknowledged that some in the Fed's policy committee considered the potentially inflationary impact of the incoming administration's actions. And one Fed voting member, Beth M. Hammack, president of the Fed Bank of Cleveland, dissented in the 12-member committee's decision, noting that she preferred to maintain the current rate instead of cutting it.

Trump has talked about cuts in taxes and regulations, which would likely stimulate economic activity. But he also has proposed tariffs on all imports and even higher levies on Chinese goods, which most analysts see as inflationary and a hit to economic growth.

Whether Trump will go through with his tariff threats, and if so, when and by how much, remain highly uncertain.

Beyond questions about the new administration's intentions, Fed policymakers already had reason to slow their rate-cut plans. The American economy and jobs, while slowing a bit, have kept growing at a solid pace.

At the same time, consumer price inflation, which reached near double digits in the summer of 2022, has recently been moving sideways and even a little up instead of trending down toward the Fed's 2% target.

Inflation edged up a notch in November, with prices rising 2.7% from a year earlier as consumers paid more for used cars and airline fares, but also staple items like medical care and foods purchased for home. Rising grocery prices, in particular, have gnawed at consumer sentiments, and were seen as a key factor in Trump's victory in November.

"I think for lower- and moderate-income households, the budgetary battle continues, month in and month out," said Greg McBride, chief financial analyst at Bankrate.com. "Inflation on everyday necessities continues to be an issue."

In September, having seen progress on inflation and wanting to support the job market, the Fed began its latest rate-cutting scheme by making a big half-point reduction, followed by two quarter-point moves. And based on the trajectory of inflation then, it had forecast four more smaller cuts next year.

But on Wednesday, the Fed's updated projections showed officials expecting just two quarter-point cuts in 2025 and another two the following year. And analysts say policymakers are likely to pause at their next rate-setting meeting in January.

In their latest projections, most Fed officials said the U.S. economy was likely to grow 2.1% next year, compared with 2.5% this year, which is up significantly from its previous September forecast.

They see their preferred measure of core inflation as ending the year at 2.8% and at 2.5% in 2025. Previously, Fed members had forecast core inflation falling to 2.2% next year.

The nation's unemployment rate, which was 4.2% in November, is expected to rise to 4.3% around this time next year.

Wednesday's announcement takes the Fed benchmark interest rate down to a range of 4.25% to 4.5%. That's a full percentage point lower than it was in September, but is still considered significantly above the so-called neutral rate that's neither stimulative nor restrictive for the economy.

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