WASHINGTON—The Federal Reserve on Wednesday cut interest rates by a quarter point, lowering the target range for the federal funds rate to 3.5% to 3.75%, marking the third consecutive rate cut as policymakers respond to slowing job growth and easing inflation pressures.
The Fed said economic activity continues to expand at a moderate pace, while job gains have slowed and unemployment has edged higher through September.
In its statement, the Federal Open Market Committee emphasized that inflation remains somewhat elevated and uncertainty around the economic outlook is still high. The Fed said it will carefully assess incoming data and risks before making further adjustments, underscoring that future policy moves will depend on labor market conditions, inflation trends, financial developments, and global factors.
America’s Credit Unions Chief Economist Curt Long said internal divisions at the Fed signal a more cautious outlook for 2026.
"The FOMC cut rates for the third meeting in a row, but signaled a higher bar for further moves in 2026,” stated Long. “Six of 19 members indicated on their forecasts that they opposed a rate cut at this meeting, and seven believe rates should not decline in 2026. However, the committee also expects unemployment to decline next year alongside moderating inflation. For the hawkish faction, it will likely take a meaningful rise in unemployment to justify more rate cuts next year."
The vote showed notable disagreement among policymakers. Chair Jerome Powell and eight others supported the quarter-point cut, while one member favored a larger half-point reduction and two dissented in favor of holding rates steady. The Fed also said it will begin purchasing shorter-term Treasury securities as needed to maintain ample reserve balances in the banking system.