Federal Reserve lowers interest rates for the third straight meeting

The Federal Reserve lowered interest rates on Wednesday for the third consecutive meeting, continuing its effort to protect a weakening labor market despite growing disagreements within the central bank. Policymakers voted to reduce the benchmark lending rate by a quarter point, bringing it down to a range between 3.5 percent and 3.75 percent, the lowest level in more than three years.

The decision came with three dissents — from Fed Governor Stephen Miran, Kansas City Fed President Jeffrey Schmid, and Chicago Fed President Austan Goolsbee — marking the highest number of dissents since 2019. It also continued a months-long trend of non-unanimous votes as officials remain sharply divided over whether to prioritize employment stability or combat stubbornly high inflation.

This year’s rate reductions follow signs of economic softening, including slow job growth and rising unemployment among younger Americans and minority groups. However, inflation remains above the Fed’s long-term goal and is expected to rise further next year as tariffs implemented under President Donald Trump increasingly affect consumer prices.

Chair Jerome Powell, entering his final months leading the Fed, has described the internal disagreement as a healthy debate. Economists say it signals a more cautious approach ahead and could make it harder for investors to predict the central bank’s next moves.

Fed officials released new projections Wednesday showing they expect just one rate cut next year. Their policy statement suggested that additional cuts will depend on future economic data, including next week’s inflation and employment reports for October and November.

Meanwhile, Trump has continued to publicly press for more aggressive rate reductions and is preparing to name a successor to Powell when his term ends in May. But any future Fed chair will still have to persuade the broader committee, since the role comes with only one vote.

Two officials who will rotate into voting positions next year, Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack, have recently expressed concerns about further rate cuts. Among the 12 regional Fed presidents, only four hold voting power at a time, in addition to the New York Fed president, who votes permanently.

This is a developing story and will be updated.

Credit: CNN Newsource

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