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The Federal Reserve reduced interest rates by a quarter percentage point Wednesday, marking its second consecutive cut as policymakers attempt to shore up a weakening labor market while navigating an economy clouded by tariffs and a prolonged government shutdown.
The central bank's rate-setting committee voted 10-2 to lower its benchmark lending rate to a range between 3.75 percent and 4.00 percent, according to a Fed statement. The decision exposes deepening rifts within the institution over the appropriate path forward.
The dissenting votes came from opposite directions. Fed Governor Stephen Miran advocated for a more aggressive half-point reduction, while Kansas City Fed President Jeff Schmid "preferred no change to the target range for the federal funds rate at this meeting," the Fed said.
The rate cut arrives as American businesses grapple with the economic fallout from President Donald Trump's expansive tariff policies. It also grants the Fed additional time to assess economic conditions while the government shutdown — now approaching its one-month mark — has frozen the release of nearly all official economic data.
The political impasse between Republicans and Democrats shows no signs of resolution, leaving policymakers and market participants operating with limited visibility into the economy's health.
In a separate announcement Wednesday, the Fed said it would halt its balance sheet reduction program on December 1. The central bank's holdings expanded dramatically during the early stages of the Covid-19 pandemic to support financial markets and the economy, and have been gradually contracting in recent years as conditions normalized.
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