Fed cuts rates after holding off for months amid tariff turmoil
The Federal Reserve announced a quarter-percentage-point rate cut on Wednesday, after taking a wait-and-see approach to President Donald Trump’s sweeping tariffs.
Wednesday’s rate cut was the Fed’s first since late 2024. The move lowers the benchmark interest rate to a range between 4% and 4.25%, the lowest level in nearly three years. That’s down from a target of between 4.25% and 4.5%, where the Fed held it for most of Trump’s second term. Officials signaled the possibility of two more rate cuts this year.
“Recent indicators suggest that growth of economic activity moderated in the first half of the year,” according to the Federal Open Market Committee. “Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated.”
The FOMC said the decision was in “light of the shift in the balance of risks.”
Trump’s newest appointee to the FOMC, Stephen Miran, was the only member to oppose the move. He wanted a half percentage point cut.
Federal Reserve Chairman Jerome Powell said support for a larger cut was weak.
“There wasn’t widespread support at all for a 50 basis point cut today,” the chairman said at a news conference after the meeting. “I think we’ve done very large rates hikes and very large rate cuts in the last five years, and you tend to do those at a time when you feel that policy is out of place and needs to move quickly to a new place. That’s not at all what I feel right now.”
He continued: “I feel like our policy has been doing the right thing so far this year. We were right to wait and see how tariffs and inflation and the labor market evolved.”
Lisa Cook, the Biden appointee who Trump tried to fire, voted with the rest on the rate cut.
Trump wants even lower rates and has aggressively pushed the independent central bank to lower rates.
Trump has said the U.S. should have the lowest rates in the world.
Not everyone agrees with the FOMC decision.
Cato Institute Research Fellow Jai Kedia said rates should have stayed flat or ticked up.
“The Fed cut its target for the federal funds rate by 25 basis points with near unanimous consent. The weakening labor market ultimately convinced the FOMC to cut the rate but this decision is not a clear positive with recent data showing inflation well above the Fed’s 2% target,” Kedia said. “In fact, monetary policy rules would advocate keeping rates steady or even a minor increase. This increased uncertainty is likely the result of negative supply factors that make the Fed’s job much harder.”
This breaking news will be updated.
Sunny
Latest News Stories
Illinois lawmaker warns medical records bill could delay care
‘Farm Bill’ may ease cost burden for farmers; Ag groups urge US Senate action
Indiana voters to decide compeititive congressional primary races Tuesday
U.S. debt tops 100% of GDP, ‘deeply troubling’ for economy, national security
Erupting Volcanoes, Culinary Creations, and Caterpillars Highlight Casey-Westfield Spring Academics
U.S. troops in Italy, Spain hang in balance as troop reduction in Germany announced
Federal appeals court halts access to mail-order abortion drug
Labor unions back McCormick’s plan to reform federal permitting
Court-ordered tariff refunds bypass consumers who paid
Late Three-Run Surge Propels Casey-Westfield Baseball Past Marshall, 6-3
Gustafson Strikes Out 11 as Marshall Softball Defeats Casey-Westfield 4-1
Professor: Surging gas prices will have long-term effects
