Federal Reserve Cuts Interest Rates Amid Economic Concerns

The U.S. Federal Reserve cut interest rates by 0.25 percentage points to a range of 3.5% to 3.75% during a divided meeting, marking the third consecutive cut since September, as reported by El País English.

Chairman Jerome Powell faced dissent within the Federal Open Market Committee, with three officials opposing the move, the most dissent seen in six years. The cuts come amid concerns regarding a weakening labor market, as the unemployment rate rose to 4.4%, with job creation slowing to its lowest since the pandemic.

Powell indicated that the Fed is close to a neutral rate and signaled a cautious approach going forward, with expectations of potentially only one rate cut next year, according to the Chicago Sun-Times.

The ongoing debate within the Fed reflects broader economic uncertainties, including persistent inflation and a labor market that may be more fragile than it appears. President Donald Trump criticized the rate cut as inadequate, expressing a desire for sharper reductions and hinting at potential changes in Fed leadership as Powell's term nears its end in May 2026.

Amidst these developments, the Fed aims to balance the need for economic stimulus against the inflation pressures still affecting consumer prices, which have risen by 2.8% year-over-year. The upcoming meetings will be pivotal in determining the Fed's direction as they assess incoming economic data post-government shutdown, which has delayed crucial statistics critical for policy decisions.