Fed delivers second rate cut, Powell tempers December expectations

(Sharecast News) - The Federal Reserve approved a second consecutive interest rate cut on Wednesday, lowering its benchmark borrowing rate by 25 basis points to a range of 3.75%-4.00%, though chair Jerome Powell unsettled markets by signalling uncertainty over a further move in December. The decision was backed by a 10-2 vote from the Federal Open Market Committee, with Governor Stephen Miran favouring a larger half-point cut and Kansas City Fed President Jeffrey Schmid preferring no change. The Fed also said it would end its quantitative tightening programme on 1 December.

While policymakers had previously indicated the potential for three cuts in 2025, Wednesday's statement offered no guidance on the December meeting. Powell cautioned against assuming another reduction was guaranteed, despite market expectations for further easing amid signs of labour market softness and slowing growth.

"In the committee's discussions at this meeting, there were strongly differing views about how to proceed in December," Powell said. "A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it."

He added that there was "a growing chorus" among the 19 Fed officials to "at least wait a cycle" before cutting again.





Reporting by Iain Gilbert at Sharecast.com