US Fed meeting: Jerome Powell-led FOMC cuts rates by 25 basis points; lowest level in almost three years – The Times of India

The Federal Open Market Committee (FOMC) of the US Federal Reserve, led by Fed Chairman Jerome Powell, cut the key interest rate by 25 basis points on Wednesday. The rate is now between 3.5 percent and 3.75 percent, the lowest level in almost three years. “In support of its objectives and in light of the shift in the balance of risk, the Committee has decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3-3/4 percent,” the Fed press release said.“Available indicators suggest that economic activity has grown at a moderate pace. Job growth has slowed this year and the unemployment rate has risen modestly through September. More recent indicators are consistent with these developments. Inflation has increased since earlier this year and remains somewhat elevated,” the report said.The cut would support the world’s largest economy as labor conditions worsen, although officials remain concerned about persistent inflation as U.S. President Donald Trump’s tariffs impact supply chains.The Federal Reserve was widely expected to make its third straight interest rate cut this week, despite expected disagreements among policy officials at their two-day conference. Markets were largely expecting another quarter-point rate cut after Tuesday and Wednesday’s Federal Reserve meeting.“It is difficult to remember a time when the Federal Open Market Committee was so divided on the need for additional rate cuts,” said economist Michael Pearce of Oxford Economics, referring to the Fed’s rate-setting committee, according to an AFP report.These divisions emerge as high inflation signals caution in rate cuts, while labor market risks justify lower rates, he noted in a recent analysis. The recent government shutdown has created additional challenges as it has resulted in a lack of official employment statistics for October and November.The Federal Reserve’s decision-making committee consists of twelve people with voting rights. This includes seven governors, the president of the New York Federal Reserve and rotating presidents of other reserve banks, who jointly determine interest rate policy through majority voting.The Federal Reserve maintains two objectives: achieving maximum employment while ensuring price stability. These objectives sometimes conflict with each other. When interest rates are lowered, economic activity tends to increase, while higher interest rates tend to limit economic growth and help control inflation.Recent statistical data indicated a slowdown in employment figures. The government shutdown from October to mid-November caused delays in releasing more up-to-date federal statistics.