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Reuters<\/p>\nDanielle KayeBusiness reporter<\/p>\n
Reuters<\/p>\n
US Federal Reserve Chair Jerome Powell<\/p>\n
The US Federal Reserve has lowered interest rates for the third time this year, even as internal divisions create uncertainty about additional cuts in the coming months.<\/p>\n
The central bank said on Wednesday it was lowering the target for its key lending rate by 0.25 percentage points, putting it in a range of 3.50% to 3.75% – its lowest level in three years.<\/p>\n
But policymakers disagree about how the Fed should balance competing priorities: a weakening job market on the one hand, and rising prices on the other.<\/p>\n
The Fed’s economic projections released on Wednesday suggest one rate cut will take place next year, although new data could change this.<\/p>\n
Fed chair Jerome Powell said central bankers needed time to see how the Fed’s three cuts this year work their way through the US economy. Policymakers will examine incoming data closely ahead of the Fed’s next meeting in January, he added.<\/p>\n
“We are well-positioned to wait to see how the economy evolves,” Powell told reporters.<\/p>\n
Those hoping for interest rates to keep coming down, including President Donald Trump, might have to wait.<\/p>\n
The Fed is facing a “very challenging situation” as it confronts risks of rising inflation and unemployment, Powell said, adding: “You can’t do two things at once”.<\/p>\n
The decision to lower rates on Wednesday was not unanimous, suggesting widening divisions among central bankers over the outlook for the US economy. <\/p>\n
Three Fed officials broke ranks and officially dissented.<\/p>\n
Stephen Miran, who is on leave from his post leading Trump’s Council of Economic Advisers, voted for a larger 0.5 percentage point cut. <\/p>\n
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, and Jeffrey Schmid, president of the Federal Reserve Bank of Kansas City, voted to hold rates steady.<\/p>\n
Trump, who has repeatedly urged Powell to lower rates, said after the meeting on Wednesday that the Fed’s cut could have been “at least doubled”.<\/p>\n
“Our rates should be much lower,” he said at a roundtable at the White House. “We should have the lowest rates in the world.”<\/p>\n
A data blackout during the longest-ever US government shutdown, which ended in November, has left policymakers partially in the dark about the state of the economy. But concerns about a slowing job market continue to outweigh inflation fears, at least for now.<\/p>\n
The unemployment rate ticked up from 4.3% to 4.4% in September, Labor Department figures showed in a delayed report released last month<\/a>. Cutting interest rates is aimed at stimulating the job market by creating lower borrowing costs for businesses.<\/p>\n