The Federal Reserve on Wednesday cut interest rates by 25 basis points, lowering the benchmark range to 3.75%–4%. The decision, approved by a 10–2 vote, marks the second rate reduction this year following a similar 0.25% cut last month.
Markets initially reacted negatively, with the S&P 500 and Dow declining after Fed Chair Jerome Powell emphasized uncertainty surrounding the central bank’s December policy meeting.
“A further reduction in the policy rate at the December meeting is not a foregone conclusion — far from it,” Powell stated, signaling that future easing will depend on economic data.
During his press conference, Powell noted that policymakers are monitoring labor market softening closely and stressed that the Federal Reserve remains focused on both inflation risks and employment stability.
In addition to the rate cut, the Fed announced it will end its balance sheet reduction program — known as quantitative tightening — on December 1.
The decision comes amid limited economic data due to the ongoing federal government shutdown, which has delayed key reports on inflation and employment.
Powell reiterated the central bank’s commitment to responding to emerging economic trends, stating, “We are watching layoffs very carefully.”
