Fed Cuts Rates a Third Straight Time Over Three Dissents, Signals Pause

The Federal Reserve cut its benchmark interest rate by a quarter percentage point on Wednesday, the third consecutive reduction, bringing the federal funds rate to a range of 3.5 percent to 3.75 percent from 3.75 percent to 4 percent, CBS News and NBC News reported. The range is the lowest since early November 2022 and the three cuts since September total 0.75 percentage point this year.

The decision was divided. NBC News reported that three officials dissented, the most friction on the normally united committee since September 2019. Fed governor Stephen Miran, who is on temporary leave from the White House, voted for a half-point cut, while regional presidents Jeff Schmid and Austan Goolsbee voted for no change.

Fed Chair Jerome Powell said at a press conference that a gradual cooling of the labor market has continued, and that unemployment is up three-tenths of a point from June through September. He said the central bank believes recent job numbers are overstated by about 60,000, which would mean payrolls are shrinking by about 20,000 a month rather than rising by about 40,000, according to NBC. CBS noted that the Fed has had limited official data because of the recent government shutdown, and that payroll processor ADP reported employers shed 32,000 jobs in November.

Powell also acknowledged the other side of the Fed’s mandate. “There is no risk-free path for policy as we navigate this tension between our employment and inflation goals,” he said, adding that tariffs are helping keep inflation higher than it would otherwise be and that the Fed’s obligation is to make sure “a one-time increase in the price level does not become an ongoing inflation problem.” NBC reported that a few committee members had expressed concern that lower rates could push consumer prices higher.

The Fed signaled it is likely to stop for now. The committee’s statement said it will “carefully assess incoming data, the evolving outlook and the balance of risks” in considering further adjustments, and Powell said the Fed is “well positioned to wait to see how the economy evolves,” with delayed November jobs and inflation reports due later this month and the next decision at the January meeting. In new projections, officials expect one cut in 2026 and one in 2027, according to NBC and CBS. They forecast unemployment holding at 4.4 percent next year, inflation cooling to 2.4 percent by the Fed’s preferred gauge from 2.9 percent in 2025, and economic growth rising to 2.3 percent from a 1.8 percent estimate in September, CBS said.

Ryan Sweet of Oxford Economics told clients the guidance sets up an “extended pause,” adding that rate cuts are unlikely to significantly boost hiring because the weakness stems from factors such as policy uncertainty and less immigration, which monetary policy cannot fix, CBS reported.

For households, the lower rates could cut costs for people with mortgages, credit card debt or personal loans, NBC said, while businesses can borrow more cheaply. Markets rose: the S&P 500 closed up 0.7 percent and the Dow gained more than 510 points, NBC reported, helped by the Fed’s separate announcement that it will buy billions of dollars of Treasury bonds per month to support the plumbing of the financial system.