Fed Cuts Rates for Second Straight Meeting
On Wednesday, the Federal Reserve lowered its federal funds target range by 25 basis points to 3.75–4.0 percent, marking its second consecutive rate cut. This adjustment was widely expected by markets despite inflation remaining stubbornly high.
Voting and Opinions
- Governor Stephen Miran supported a larger 50-basis-point cut.
- Kansas City Fed President Jeffrey Schmid preferred to keep rates steady.
Fed Chair’s Remarks
“Policymakers face challenges on both sides of the central bank’s dual mandate that calls for a balanced approach,” said Fed Chair Jerome Powell.
Though the government shutdown delayed official labor data, available indicators suggest hiring has slowed and economic conditions are softening, while inflation remains above the Fed’s two-percent target.
Economic Growth and Outlook
Powell noted that economic activity is expanding at a moderate pace. Gross domestic product grew 1.6 percent in the first half of the year, with data before the shutdown indicating stronger-than-expected growth driven by resilient consumer spending and steady business investment.
He cautioned that the shutdown will temporarily drag on output but expects this effect to reverse once the government reopens.
Summary
The Fed continues cautious rate cuts amid persistent inflation and slowing employment, balancing growth concerns with inflation control.