Central bank trims key rate to 3.6% as divisions widen over inflation and growth outlook.
By yourNEWS Media Newsroom
The Federal Reserve cut interest rates by a quarter point Wednesday—its third consecutive reduction—but signaled it may pause future cuts, citing persistent inflation and internal divisions over the pace of easing.
The move brings the benchmark rate down to 3.6%, its lowest level in nearly three years. The decision drew three dissents, the most in six years, as two officials favored holding rates steady while Stephen Miran, appointed by President Donald Trump, pushed for a half-point cut.
Fed officials now project just one additional rate cut next year, according to the bank’s latest quarterly outlook. The central bank continues to face tension between its dual goals of controlling inflation and supporting employment amid rising political scrutiny.
Inflation remains above the Fed’s 2% target, with consumer prices up 25% since 2020, while unemployment has risen to 4.4%, its highest in four years. Officials say job gains have slowed significantly, but layoffs remain limited, reflecting what economists describe as a “low hire, low fire” labor market.
President Trump has pressed for faster rate reductions, calling for immediate cuts to spur growth. His term to appoint a new Fed chair begins in May, and he has suggested Kevin Hassett, his top economic adviser, as a potential replacement for Jerome Powell.
The Fed’s next meeting in late January will include several months of delayed economic data following the recent government shutdown. Analysts say the central bank’s next move will depend heavily on whether inflation continues to cool or the labor market weakens further.
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