The Fed finally made its move.
The central bank cut interest rates by a quarter point Wednesday — its first reduction since December — as it tries to revive a cooling job market while taking heat from President Trump.
The cut lowers the Fed’s benchmark short-term rate to about 4.1% from 4.3% and came with a clear message: two more reductions are expected before year’s end.
“Downside risks to employment have risen,” the Fed said, pointing to weak hiring and rising unemployment. Just 22,000 jobs were added in August, while joblessness ticked up to 4.3%. Inflation is still hovering near 3%, above target, but Fed officials say stabilizing the labor market is now the priority.
Not everyone agreed. Stephen Miran, Trump’s brand-new appointee to the Fed board, wanted a steeper half-point cut. Trump himself has been blasting the Fed nonstop, demanding deeper, faster reductions.
Markets cheered the move — stocks rose, Treasury yields slipped — but investors had hoped for a faster pace of cuts. Powell and his team instead outlined two more moves in 2025 and just one in 2026.
It’s the first rate cut in nine months — and it sets the stage for a bumpy fight over how far, and how fast, the Fed should go.
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