Ammon News - The US Federal Reserve announced on Wednesday that it was cutting interest rates by a quarter point for the third time this year, as the embattled central bank appeared split over how best to manage the 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.

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.

New projections from officials suggest hesitance to cut rates further next year, a refusal that could further rifts between the Fed and the White House. In a press conference on Wednesday, Powell said the Fed was trying to balance “significant downside risks” in the jobs market with inflationary pressures from Trump’s tariffs that are “pretty clear to see”.

Earlier in the year, Fed officials said they were waiting to see how Donald Trump’s tariffs would impact prices before making any changes to interest rates, pausing a rate cutting campaign that had started last fall.


The Guardian