1 month ago
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Topline
The Federal Reserve on Wednesday voted to lower interest rates again, the second straight month the central bank eased monetary policy after months of pressure and criticism from President Donald Trump, who has called for steeper cuts.
Some policymakers have expressed caution about lowering rates further, while President Donald Trump and his recent appointee have pushed for steep cuts.
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Key Facts
The Federal Open Market Committee voted 10-2 in favor of easing interest rates by a quarter-point to between 3.75% and 4%, down from the 4% to 4.25% range policymakers opted for during the FOMC’s meeting last month.
Kansas City Fed President Jeffrey Schmid and Fed Governor Stephen Miran were the lone dissenting votes: Miran again pushed for a half-point reduction after dissenting in September’s vote, while Schmid preferred the Fed not lower rates at all.
In its statement, the FOMC held its review of the labor market, which notes that “job gains have slowed and the unemployment rate has edged up but remained low through August.”
The Fed appeared to acknowledge the ongoing federal government shutdown, adding “available indicators” suggest the U.S. economy has expanded at a moderate pace and that inflation has “moved up since earlier in the year and remains somewhat elevated.”
Will The Fed Lower Interest Rates Again?
Investors are favoring an additional quarter-point reduction to interest rates at the FOMC’s last meeting in December, potentially lowering rates to between 3.5% and 3.75%, according to CME’s FedWatch tool. In its meeting last month, Fed officials appeared to be divided over whether to cut rates for a third time this year. It’s unclear when the Fed will have insight into the U.S. economy’s health, however, as an ongoing federal government shutdown has postponed reports on inflation and unemployment. In a speech to the Council on Foreign Relations earlier this month, Fed Governor Christopher Waller said he supported the FOMC’s decision to ease monetary policy, indicating his focus had shifted to a “softening” labor market instead of inflation. Waller said that, because policymakers “don’t know which way the data will break on this conflict,” the FOMC would “need to move with care” when adjusting interest rates. Waller noted he has spoken with “business contacts” to form his outlook on the economy while a data blackout continues. Reports released from several firms and economists in recent weeks suggest the labor market has continued to deteriorate, suggesting the FOMC could have data to support an additional cut.
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