The Federal Reserve, facing heightened concerns over softening employment conditions, reduced its benchmark interest rate by 25 basis points on Wednesday — the first such move since December. The central bank signaled its readiness for additional monetary easing, aiming to stave off further deterioration in a labor market marked by rising Black unemployment, shrinking workweeks, and other fragile indicators.
The rate reduction aligns directionally with President Donald Trump’s ongoing calls for lower borrowing costs, though it does not match the aggressive cuts he has advocated. Over the summer, President Trump reiterated on social media his view that rates remain “AT LEAST” three percentage points too high.
Fed Chair Jerome Powell, addressing reporters after the central bank set the federal funds rate target between 4.00% and 4.25%, emphasized that labor market health has overtaken inflation as the primary concern. Powell suggested more rate cuts are likely in the coming meetings scheduled for October and December, citing subdued job creation that now lags the pace required to maintain current unemployment levels. He warned that with overall hiring slowing sharply, any rise in layoffs could drive unemployment higher relatively quickly.
The decision was not unanimous. Newly appointed board member Stephen Miran, who succeeded former Governor Adriana Kugler, dissented and advocated instead for a more substantial half-point reduction.
