The US Federal Reserve on Wednesday announced its second consecutive quarter-point rate cut to bolster the flagging labor market, unveiling a decision that highlighted the growing division in its ranks. Policymakers voted 10-2 in favour of lowering the bank’s key lending rate to between 3.75% and 4.0%, the Fed said in a statement.
Opposed to the action were Fed governor Stephen Miran, who backed a bigger half-point cut, and Kansas City Fed president Jeff Schmid, who “preferred no change to the target range for the federal funds rate at this meeting,” the Federal Reserve said. The decision to reduce rates boosts the US economy at a time businesses are still digesting the effects of President Donald Trump’s sweeping tariffs, and buys policymakers some more time as they wait for the end of govt shutdown.
Republicans and Democrats remain politically gridlocked almost a month after the start of the shutdown, which has resulted in a suspension of publication of almost all official data. Fed officials have in recent months flagged concerns that the labour market is cooling, causing them to shift their attention to bolstering hiring, even though inflation remains above the Fed’s target.