Federal Reserve Cuts Interest Rates Again by 0.25%

The U.S. Federal Reserve has cut interest rates by 0.25%, marking its second consecutive reduction as signs of a cooling labor market and persistent uncertainty continue to shape the economic outlook. The move lowers the benchmark federal funds rate to a new target range of 3.75% to 4.00%.

Announcing the decision in Washington, Fed Chair Jerome Powell said the cut reflects “softening in job growth and moderation in economic activity,” though he stressed that inflation remains above the bank’s long-term target. Powell emphasized that the central bank is not committing to a series of automatic cuts, adding that upcoming data on employment and consumer prices will dictate future policy.

The vote was not unanimous. Two members of the Federal Open Market Committee dissented, one favoring a larger cut, the other preferring no change at all  underscoring the divide within the central bank over how aggressively to support the slowing economy.

Financial markets reacted immediately. Treasury yields dipped, stocks showed modest gains, and lending rates for mortgages, business loans, and other credit began inching lower. Traders are now increasingly expecting another potential cut at the Fed’s December meeting.

Economists say the move signals the central bank’s attempt to strike a delicate balance: easing pressure on households and businesses without allowing inflation to flare up again. The Fed previously cut rates in mid-September after months of holding steady.

For Americans, the latest reduction could translate into slightly cheaper borrowing costs, though the effects may take time to filter through the economy. Many existing loan rates are tied to longer-term trends, which adjust more gradually.

Despite today’s action, Powell issued a measured outlook, warning that inflation “remains somewhat elevated” and that the Fed will proceed carefully to avoid undermining progress made over the past year. With the holiday season approaching, upcoming labor-market data and monthly inflation figures will play a decisive role in shaping whether the central bank moves again  or pauses to reassess.

The rate cut reinforces the Fed’s message: it stands ready to support growth if the economy weakens further, but is equally prepared to hold back if inflation risks returning.

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