WASHINGTON—As expected, the Federal Reserve cut its key interest rate Wednesday by 25 basis points, bringing its key rate down to about 3.9%, from about 4.1%.
“Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated,” the Fed stated in a release.
The Committee added that it continues to aim for maximum employment and a long-run inflation rate of 2%. It noted that uncertainty surrounding the economic outlook remains high and that downside risks to employment have increased in recent months, even as it remains alert to challenges on both sides of its dual mandate.
Voting in favor of the 25 BP cut were Jerome Powell, chair; John Williams, vice chair; Michael Barr; Michelle Bowman, Susan Collins, Lisa Cook, Austan Goolsbee, Philip Jefferson, Alberto Musalem and Christopher Waller. Voting against this action were Stephen Miran, who preferred to lower the target range for the federal funds rate by one-half percentage point, and Jeffrey Schmid, who preferred no change, the Fed said.
America's Credit Unions said Powell's media interview Wednesday provided intrigue.
"The FOMC trimmed rates by 25 basis points at its next-to-last meeting of the calendar year," said America's Credit Unions Chief Economist Curt Long. "Chair Powell’s press conference provided more intrigue, as he appeared to push back on the consensus view that another rate cut is coming in December. Reliable economic data will remain in scarce supply until the government reopens, which further clouds the outlook. Regardless of economic conditions, credit unions remain committed to assisting their members in times of need."