The U.S. Federal Reserve has lowered interest rates for the third time this year, even as internal divisions create uncertainty about any additional cuts in the coming months, BBC reports, transmitted by RKS News.
The central bank announced Wednesday that it is reducing its target for the benchmark lending rate by 0.25 percentage points, placing it in the range of 3.50% to 3.75% — the lowest level in three years.
However, policymakers remain divided on how the Federal Reserve should balance competing priorities: a weakening labor market on one side and persistent price increases on the other.
Freshly released Fed economic projections suggest one rate cut is expected next year, though new data could alter that outlook.
Fed Chair Jerome Powell said central bankers need more time to understand how this year’s three rate cuts will affect the U.S. economy. Policymakers will closely monitor incoming data ahead of the January meeting, he added.
“We are well-positioned to wait and see how the economy evolves,” Powell told reporters.
Those hoping for continued rate cuts — including President Donald Trump — may have to wait.
Powell said the Federal Reserve is facing a “very challenging situation”, dealing simultaneously with the risks of rising inflation and increasing unemployment, emphasizing that “you can’t do two things at once.”
The decision to cut rates on Wednesday was not unanimous, signaling deeper divisions within the central bank over the economic outlook.
Three Federal Reserve officials broke ranks and officially dissented.
