Federal Reserve Cuts Interest Rates Amid Economic Uncertainty and Divergent Views
The Federal Reserve has cut the federal funds target range by 0.25 percentage points to 3.50%–3.75%, marking its third rate cut this year. The Federal Open Market Committee (FOMC) approved the decision with a vote of 9–3, reflecting division within the committee about the appropriate path for monetary policy amid mixed economic signals.
The cut comes amid significant uncertainty stemming from tariffs, President Trump's immigration crackdown, and government spending cuts, compounded by halted data collection during a government shutdown. Inflation rose to 3.0% in September, up from 2.3% in April, while the unemployment rate increased to 4.4% in September from 4.0% in January.
Fed Chair Jerome Powell emphasized that the rate cut was not based on a belief that inflation is falling, but rather concerns about the labor market and future growth trajectory. Minutes from the October meeting highlighted strongly differing views on whether to move toward a more neutral policy stance, with some members favoring further cuts, while others did not.
Powell's term as Fed chair is set to end in May next year, and President Trump is considering a replacement. Kevin Hassett has been named as a possible nominee, with a decision expected within weeks.
