US Federal Reserve Cuts Interest Rates for the Third Time
The United States Federal Reserve has cut its key interest rate by 25 basis points to a range of 3.50% to 3.75%. This decision was made after a two-day policy meeting, marking the third consecutive time the US central bank has lowered its benchmark interest rates since September 2025.
5 Key Highlights from the US Fed's Policy Decision
- Fed Cuts Interest Rates: The Federal Reserve has cut its benchmark interest rates by 25 basis points to support its goals and address the shift in the balance of risks. Nine out of 12 members voted in favor of the decision, while one member wanted a 50 basis point cut, and two members wanted to keep rates unchanged.
- Future Rate Cuts: Fed Chair Jerome Powell said that the central bank may either hold interest rates or cut them in the next meeting, as it enters a wait-and-watch mode for upcoming economic data. Powell dismissed the idea of a rate hike, saying it's not a base case for now.
- Inflation Concerns: Despite cutting interest rates, the US Fed is still concerned about elevated inflation levels in the US economy and a slowing job market. The central bank aims to maximize employment while bringing inflation levels to its 2% goal.
- Downside Risk to Labor Market: The US labor market is facing downside risks, with the unemployment rate rising to 4.4% in September 2025. The Fed is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen in recent months.
- US Reserves in Focus: The US Federal Reserve highlighted that reserve balances have declined and aims to purchase short-term bonds to maintain an ample supply of reserves on an ongoing basis.
The US Federal Reserve's decision to cut interest rates has significant implications for the US economy and the stock market. As the central bank enters a wait-and-watch mode, all eyes will be on upcoming US economic data releases to gauge the outcome of the Federal Reserve's policy decisions.
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