The Federal Reserve on Wednesday announced its third interest rate cut of the year as policymakers moved forward with the cut to support the labor market despite elevated inflation.
Fed policymakers voted to lower the benchmark federal funds rate by 25 basis points to a new range of 3.5% to 3.75%. The move follows rate cuts of that size in September and October, which were the first of the year.
Policymakers have been tracking economic data showing a slowdown in the labor market in recent months as companies adjust to shifts in trade and immigration policy. Meanwhile, inflation has trended higher as tariff-related price hikes filter through the economy.
Those dynamics have put the Fed in a difficult spot as it looks to fulfill its dual mandate goals of stable prices in line with the 2% long-run target for inflation as well as promoting maximum employment.
The Federal Open Market Committee (FOMC), which handles the Fed’s monetary policy decisions, voted to cut by 25 basis points with the support of nine policymakers with three dissenters. Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid dissented in favor of leaving interest rates unchanged, while Fed Governor Stephen Miran dissented in favor of a larger 50 basis point cut.
Policymakers said in the FOMC’s announcement that uncertainty remains elevated, with job gains slowing this year and the unemployment rate rising through September, while inflation has also risen over the course of the year and remains somewhat elevated.
This is a developing story. Please check back for updates.
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