Fed Approves Quarter-Point Cut — What Happened at the Fed Meeting Today
The Federal Reserve on Wednesday approved a widely anticipated rate cut, lowering its benchmark overnight lending rate by a quarter percentage point to a range of 4.00%–4.25% in an 11-to-1 vote. Newly installed Governor Stephen Miran was the lone dissenter, advocating a half-point cut instead. Governors Michelle Bowman and Christopher Waller both supported the 25-basis-point reduction. Chair Jerome Powell described the move as “risk management” at his post-meeting news conference.
The committee’s post-meeting statement said economic activity has “moderated,” added that “job gains have slowed,” and noted inflation “has moved up and remains somewhat elevated.” It also warned that “uncertainty about the economic outlook remains elevated” and judged that “downside risks to employment have risen.”
Mortgage Rates Today — Market Reaction and Treasury Yields
Markets reacted with volatility after the Fed’s decision. Major stock averages were mixed, and Treasury yields moved unevenly — falling on short-duration issues but rising elsewhere. Those mixed signals left investors parsing Powell’s framing of the move and the message from Fed officials.
Dan North, chief economist at Allianz Trade North America, pushed back on the “risk management” characterization, saying, “I think it’s a move where we’re definitely trying to manage the economy. And not just say, ‘OK, we’re going to take this little cut here and use it to help prevent anything from getting worse.’”
Fed Rate Path: Two More Cuts Projected This Year
Alongside the decision, the Fed’s “dot plot” showed that a majority of officials expect two more cuts before year-end, though views varied widely. Ten participants signaled two cuts (implying moves at the October and December meetings). Nine pointed to a single further cut, and one official preferred no cuts beyond Wednesday’s action. One anonymous dot suggested as much as 1.25 percentage points of additional reductions.
The plot also showed one cut penciled in for 2026 and another reduction in 2027, as officials aim for a long-run neutral rate around 3 percent. Projections on general economic activity showed slightly faster growth than in June, while forecasts for unemployment and inflation were unchanged.
Politics, Voting Splits, and Fed Leadership Talk
The lead-up to the decision featured unusually high political drama. President Trump’s public pressure on the Fed and the appointment of Governor Miran, who has criticized Chair Powell, loomed over the meeting. The White House’s push for lower rates — to support the housing market and reduce government financing costs — played into the debate. But Powell said there was no “widespread support” for a half-point cut.
A related court action this week blocked Trump from removing Governor Lisa Cook. The White House has accused Cook of mortgage fraud regarding federally backed loans, an allegation she denies. Cook joined the majority in voting for the quarter-point reduction.
Labor Market Signals and Fed Officials’ Views
Officials highlighted a softer labor market as a key concern. Powell said, “The marked slowing in both the supply of and demand for workers is unusual in this less dynamic and somewhat softer labor market,” and warned that “the downside risks to employment appear to have risen.” The unemployment rate stood at 4.3% in August, the highest since October 2021, and job creation has been stagnant this year. A Bureau of Labor Statistics update showed nearly a million fewer jobs were created in the 12 months prior to March 2025 than initially reported.
Christopher Waller has urged easing now to head off further labor-market problems and has been named among those discussed as a possible successor to Powell, whose term expires in May 2026.
What Officials and Strategists Are Saying About Rate Cuts
Simon Dangoor of Goldman Sachs Asset Management summarized the shift on the committee: “A majority of the FOMC is now targeting two further cuts this year, indicating that the doves on the committee are now in the driver’s seat.” But views were not unanimous. One Fed participant wanted no cuts beyond Wednesday’s decision. And Miran pushed for more aggressive easing.
Takeaway: Fed Rate Decision and the Outlook for Rate Cuts
The Fed’s quarter-point cut puts policy in a “more neutral” stance, according to Powell. Meanwhile officials signaled additional easing ahead amid worries about jobs and persistent inflation. Markets digested mixed messages. Stocks wobbling and Treasury yields uneven. As analysts and Fed officials debated whether the committee is simply managing risk or actively steering the economy toward easier policy.
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