Fed Cuts Rates by Quarter-Point to 4%-4.25% Amid Rising Job-Market Risks

**- Fed lowers federal funds rate by 25 basis points in first cut since December

• Policy shift reflects slowing job gains and elevated inflation
• Chair Powell signals readiness for further adjustments**

The Federal Reserve on Wednesday reduced its benchmark federal funds rate by 25 basis points to a range of 4%-4.25%, citing increased downside risks to employment despite persistent inflation.

The move marks the Fed’s first rate cut in nine months and underscores its renewed emphasis on supporting a cooling labor market. By trimming borrowing costs, policymakers aim to balance their dual mandate of price stability and maximum employment.

Chair Jerome Powell noted that recent data show job gains have slowed and unemployment has edged up, though it remains low. Policymakers judged that risks to employment now outweigh inflation concerns, which “has moved up and remains somewhat elevated.”

• Slowing Activity: Economic growth moderated over the summer, with hiring softening across sectors.
• Inflation Outlook: Despite the cut, the Fed projects inflation returning to its 2% target “over the longer run.”
• Balance Sheet: The Committee will continue reducing its holdings of Treasury and mortgage-backed securities.

Officials also released updated projections hinting at two additional rate cuts before year-end, though views diverged: one governor preferred a half-point reduction today. Powell reaffirmed the Fed’s readiness to adjust policy as needed based on incoming data.

Voting in favor were Chair Powell, Vice Chair Williams and nine other governors. Stephen Miran dissented, preferring a larger 50-basis-point cut. The decision and post-meeting forecasts will guide markets as they weigh the Fed’s next moves.