WASHINGTON \u2014 The Federal Reserve cut its benchmark interest rate by a quarter point Wednesday, its third consecutive reduction, while also expressing concern about the state of the economy.<\/p>\n
\u201cAvailable indicators suggest that economic activity has been expanding at a moderate pace,\u201d the Fed said in a statement. \u201cJob gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.\u201d<\/p>\n
The Fed\u2019s rate-setting committee added that \u201cUncertainty about the economic outlook remains elevated\u201d and \u201cdownside risks to employment rose in recent months,\u201d indications that the panel may need to see improvements if it is going to cut the rate again when it meets in late January.<\/p>\n
Wednesday’s decision brings the Fed’s key rate down to range of 3.5%-3.75%, the lowest it has been in about three years.\u00a0<\/p>\n
There were several factors at play in the Fed\u2019s decision as well as differing opinions among members of the Federal Open Market Committee.<\/p>\n
Lawrence White, an economics professor at New York University\u2019s Stern School of Business, told Spectrum News<\/a> ahead of the vote that \u201cthere is a lot of uncertainty \u2014 first about what the state of the economy is, where inflation is going, where the economy, employment and unemployment is going.\u201d<\/p>\n He added that some of the data the committee relies on has not returned to its regular schedule following this fall\u2019s government shutdown.\u00a0<\/p>\n During the 43-day shutdown \u2014 the longest in U.S. history \u2014 the Bureau of Labor Statistics delayed the release of several reports and later published a revised schedule<\/a> once the funding lapse was resolved.\u00a0<\/p>\n As part of the changes, the jobs report for October was canceled and the one for November was moved to Dec. 16, meaning these unemployment numbers were not available ahead of Wednesday’s decision.<\/p>\n \u201cThe Federal Reserve \u2026 in taking its vote (Wednesday) will have even less information than usual,\u201d White said.<\/p>\n The September report, which was released Nov. 20, showed<\/a> that U.S. employers had added 119,000 jobs but also included revisions to earlier figures, indicating that the economy lost 4,000 positions in August.<\/p>\n Meanwhile, the Commerce Department said Friday<\/a> that the Personal Consumption Expenditures index, the Fed\u2019s preferred inflation gauge, showed a rise of 2.8% year-over-year in September \u2014 lower than forecast but still elevated above the central bank\u2019s 2% target. This report also came out five weeks later than it was originally scheduled to, due to the shutdown.\u00a0<\/p>\n The latest rate vote came as President Donald Trump \u2014 who has long railed against Powell in frustration over his interest rate policies \u2014 is beginning final interviews for Powell\u2019s successor. Powell\u2019s term ends in May.<\/p>\n On Air Force One on Tuesday night, Trump told reporters, \u201cWe\u2019re going to be looking at a couple different people, but I have a pretty good idea of who I want.\u201d<\/p>\n Among the names Trump has floated for the role are Kevin Hassett<\/a>, the director of the White House National Economic Council.\u00a0<\/p>\n CNBC reported Thursday that Trump, along with Treasury Secretary Scott Bessent, will interview Hassett and Fed Governor Kevin Warsh for the job.<\/p>\n