Fed cuts interest rates by a quarter point amid apparent split over US economy

"The Fed chair, Jerome Powell, has emphasized unity within the Federal Open Market Committee (FOMC), the board of Fed leaders that sets interest rates. But the nine-to-three vote to lower rates to a range of 3.5% to 3.75% was divisive among the committee that tends to vote in unanimity. New projections from officials also suggest hesitance to cut rates further next year, a refusal that could further rifts between the Fed and the White House."

"The split highlights the overall uncertainty within the Fed as the US economy absorbs major economic shakeups, including tariffs, changes to the labor force from Trump's immigration crackdown and massive government cuts. Making matters harder for Fed officials is the lack of comprehensive price and labor market data, the collection of which was halted during the government shutdown. And Trump is weighing his choice for replacing the Fed's chair."

"The latest economic data has shown slight increases to both inflation, which went from 2.3% in April to 3% in September, and unemployment, which went from 4% in January to 4.4% in September. The dual increases, while relatively small, put the Fed in a tough spot. Keeping rates too high could stall the economy, but bringing rates down too quickly could mean higher inflation."

The Federal Reserve cut interest rates by a quarter point for the third time this year, lowering the target range to 3.5%–3.75%. The decision reflected a nine-to-three split among FOMC members, signaling internal division about the policy path. Officials projected hesitance to cut rates further next year, risking friction with the White House. The economy faces uncertainty from tariffs, immigration-driven labor changes, and government spending cuts, compounded by missing price and labor data due to a government shutdown. Inflation rose from 2.3% in April to 3% in September while unemployment climbed from 4% to 4.4%, constraining policy choices.

Read at www.theguardian.com