As was expected, the US Federal Reserve cut its benchmark rates by 25 basis points, to 4% to 4.25% percent.
The FOMC noted that while inflation remains somewhat evelated, economic activity has slowed along with job growth.
Voting for the rate cut were Chairman Jerome Powell, Chair; John Williams, Vice Chair; Michael Barr; Michelle Bowman; Susan Collins; Lisa Cook; Austan Goolsbee; Philip Jefferson; AlbertoMusalem; Jeffrey Schmid; and Christopher Waller.
A single member voted against the decision as Stephen Miran wanted to cut rates by 50 bps.
The Fed meeting and its decision had taken a political turn as President Donald Trump has been criticizing the FOMC’s decision not to cut rates at past meetings. This, along with questions regarding Fed independence and an attempt to remove FOMC member Lisa Cook due to allegations of mortgage transgressions, brought greater scrutiny to the Fed’s actions and posture on future cuts.
As always, the Fed said it would be data-driven, but currently, indications point to further cuts before the end of the year.
In prepared remarks, Chair Powell said the downside risk to unemployment has risen as wages stutter. He said the impact of tariffs on the economy remains to be seen. As the border is now under control, the supply of workers diminishing demand, to a degree. He believes the risk between inflation and jobs is now moving toward “equality.” He said at the presser you could look as this decision as a risk management cut.
Powell said they are well-positioned to respond to economic challenges.
