WASHINGTON (Diya TV) — The Federal Reserve delivered its third straight interest-rate cut on Wednesday, but deep divisions inside the central bank signaled a tougher road ahead for future policy moves. The Federal Open Market Committee voted 9-3 to lower the benchmark federal funds rate to a range of 3.5% to 3.75%. The move matched expectations but came with fresh signs of uncertainty. The Fed also revised language in its policy statement, suggesting it is less sure about when it will cut rates again.
Officials said they will weigh the “extent and timing” of any future adjustments. This phrasing echoed language used in late 2024, just before the Fed paused cuts for several months. Fed Chair Jerome Powell said the central bank now holds a comfortable stance. He said officials feel “well-positioned to wait and see how the economy evolves.” He added that the rate level sits near the high end of what many consider neutral. Stocks rose after the announcement, with the Dow gaining 500 points. Treasury yields slipped as investors processed the Fed’s outlook.
The meeting exposed a rare level of disagreement among policymakers. Three members voted against the rate cut, the most dissent since 2019. Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeff Schmid wanted to hold rates steady. Governor Stephen Miran pushed for a larger, half-point cut.
This marked Miran’s third consecutive dissent and Schmid’s second in a row. The split reflects a broader debate over the biggest threat to the economy: a weakening labor market or persistent inflation. Four additional participants, who did not vote this year, signaled informal objections to the decision. Seven officials projected no rate cuts at all in 2026. Powell said the debates remain “thoughtful” and “respectful,” even as viewpoints diverge.
Recent economic reports have created a murky picture. The U.S. unemployment rate rose to 4.4% in September, up from 4.1% in June. Inflation also ticked higher, reaching 2.8% over the past year and remaining above the Fed’s 2% target. The Fed boosted its expected GDP growth for 2026 to 2.3%, up from 1.8%. Officials expect inflation to fall slightly next year but stay above target until at least 2028.
A six-week government shutdown delayed key data releases, further complicating efforts to assess economic trends. Early signs show employers are slow to hire and slow to fire. But private-sector reports point to heavier layoffs ahead, topping 1.1 million cuts through November.
The Fed announced it will resume buying U.S. Treasury bills. The move follows plans to stop shrinking its balance sheet this month and aims to ease pressure in short-term funding markets. Officials said the Fed will buy $40 billion in Treasury bills over 30 days beginning Friday. Purchases are expected to stay “elevated” for several months before tapering.
The rate cut comes as political scrutiny intensifies. President Donald Trump has criticized the Fed for not cutting rates quickly enough. He also plans to nominate a new Fed chair in May, when Powell’s term ends. Prediction markets show National Economic Council Director Kevin Hassett as the leading candidate. Some analysts say he may favor faster rate cuts. Powell has three meetings left before a successor is named.
The Fed’s latest “dot plot” projections show only one rate cut in 2026 and one more in 2027. Long-run expectations still center around a 3% federal funds rate. But the wide range of views inside the central bank suggests a difficult path ahead. For now, policymakers say they will rely on incoming data to guide their next steps. With inflation stubborn and the job market softening, the Fed faces a delicate balance as it charts the rest of its 2025 policy course.
