WASHINGTON — The Federal Reserve cut its key interest rate Wednesday by a quarter-point — its third cut this year — but also signaled that it expects to reduce rates more slowly next year than it previously envisioned, a set of remarks that prompted a plunge on Wall Street.

The market reacted immediately, with the Dow Jones Industrial Index shedding more than 1,100 points, or 2.6% by the closing bell. The tech-heavy Nasdaq, which has soared in the last year, dropped 3.6% by the close and the S&P 500 fell 2.9%, just shy of its biggest loss for the year and another retreat from its all-time high set a couple weeks ago.

The fall for the Dow marks a drop in 10 sessions in a row, reaching back to Dec. 4. The string of losses is the longest since 1974.

The Fed’s 19 policymakers projected that they will cut their benchmark rate by a quarter-point just twice in 2025, down from their estimate in September of four rate cuts. Their new projections suggest that consumers may not enjoy much lower rates next year for mortgages, auto loans, credit cards and other forms of borrowing.

“I think that a slower pace of (rate) cuts really reflects both the higher inflation readings we’ve had this year and the expectations that inflation will be higher” in 2025, Chair Jerome Powell said at a news conference. “We’re closer to the neutral rate, which is another reason to be cautious about further moves.”

“Nonetheless,” Powell said, “we see ourselves as still on track to cut.”

Fed officials have underscored that they are slowing their rate reductions as their benchmark rate nears a level that policymakers refer to as “neutral” — the level that is thought to neither spur nor hinder the economy. Wednesday’s projections suggest that the policymakers think they may be close to that level. Their benchmark rate stands at 4.3% after the latest rate cut, which followed a steep half-point reduction in September and a quarter-point cut last month.

“I think that a slower pace of (rate) cuts really reflects both the higher inflation readings we’ve had this year and the expectations that inflation will be higher” in 2025, Chair Jerome Powell said at a news conference. “We’re closer to the neutral rate, which is another reason to be cautious about further moves.”

“Nonetheless,” Powell said, “we see ourselves as still on track to cut.”

This year’s Fed rate reductions have marked a reversal after more than two years of high rates, which largely helped tame inflation but also made borrowing painfully expensive for American consumers.

One official, Cleveland Fed President Beth Hammack, thought the central bank should not have even cut rates this time around. She was the lone vote against Wednesday’s rate cut.

Blerina Uruci, chief economist at T. Rowe Price, said the tone of Powell’s news conference was surprisingly “hawkish,” meaning that it seemed to favor maintaining relatively high rates.

Uruci noted that Powell said the Fed’s decision Wednesday to reduce its benchmark rate by a quarter-point was a “closer call,” suggesting that there was opposition to the move.

“The committee might be quite divided at this point,” Uruci said. “And we have a growing hawkish contingent.”

At his news conference, Powell acknowledged that at least some Fed officials have begun to assess the potential effects of President-elect Donald Trump’s policies on the economy and inflation.

Powell noted that some policymakers think that since the election, the future path of inflation has become harder to gauge. Trump’s threats to impose tariffs on all imports and to engage in mass deportations of migrants could worsen inflation next year.

“It’s kind of common-sense thinking that when the path is uncertain, you go a little bit slower,” Powell said. “It’s not unlike driving on a foggy night or walking into a dark room with furniture.”