The U.S. Federal Reserve has officially lowered its benchmark federal funds rate to a range of 3.50%-3.75%. This reduction, amounting to 25 basis points, marks the third consecutive quarterly rate cut and is the lowest rate level since 2022. Market analysts widely anticipated this move as the Fed continues to navigate through significant economic uncertainties.
Internal dissent within the Federal Reserve has become increasingly apparent, with some members expressing starkly different views on monetary policy. Two members, Jeffrey Schmid from the Kansas City Fed and Austan Goolsbee from the Chicago Fed, voted against the rate cut, advocating instead for the central bank to maintain current interest rates. Their stance reflects a more cautious perspective on the potential impacts of further easing.
Conversely, Fed Governor Stephen Miran, appointed by former President Donald Trump, advocated for a more aggressive approach, suggesting a larger reduction of 50 basis points. This division among Fed members underscores the ongoing debates about the best strategies to manage the U.S. economy amidst persistent inflation concerns and global economic pressures.
The Federal Reserve”s policy statement also adjusted its economic projections, indicating a slight decrease in anticipated core inflation for 2025, now expected at 3%, and 2.5% for 2026. Additionally, the Fed has raised its GDP growth forecast to 1.7% for 2025 and 2.3% for 2026, reflecting a slightly more optimistic outlook.
Political dynamics further complicate the Fed”s decision-making process, especially with President Trump exerting pressure on Chairman Jerome Powell. Trump”s ongoing criticism of Powell and the Fed”s policies adds another layer of complexity, especially as speculation surrounding Powell”s potential replacement intensifies with his term ending next year.
As the market reacts to the Fed”s announcement, modest gains were observed in U.S. stocks, while Bitcoin”s price remained volatile, fluctuating around $92,400. The yield on the 10-year Treasury note experienced a slight decline, falling by two basis points to 4.15%. Investor uncertainty continues to loom, particularly in light of the ongoing U.S. government shutdown, which has led traders to speculate a 24% chance of another rate cut in January 2026, according to CME FedWatch.
Attention will now turn to Jerome Powell”s forthcoming press conference, where he is expected to shed light on the Fed”s future approach to interest rates and monetary policy. Market participants will closely monitor Powell”s statements for indications of the central bank”s trajectory in the coming months.
