The US Federal Reserve cut its benchmark interest rate by 0.25 percentage points yesterday in another divided vote, but signalled it will likely pause further reductions in borrowing costs as officials look for clearer signals about the direction of the job market and inflation that “remains somewhat elevated.”
New projections issued after the US central bank’s two-day meeting showed the median policymaker sees just one quarter-percentage-point cut in 2026, the same outlook as in September, with inflation expected to slow to around 2.4 per cent by the end of next year even as economic growth accelerates to an above-trend 2.3pc and the unemployment rate remains at a moderate 4.4pc.
The decision to lower the benchmark policy rate by a quarter of a percentage point to the 3.50pc-3.75pc range drew three dissents, with Chicago Fed President Austan Goolsbee joining Kansas City Fed President Jeffrey Schmid in arguing the policy rate should be left unchanged, and Fed Governor Stephen Miran again advocating a larger half-percentage-point reduction.
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