US Federal Reserve lowers policy rate 25 basis points in 3rd cut of the year

By Mucahithan Avcioglu

ISTANBUL (AA) - The US Federal Reserve slashed its benchmark federal funds rate by 25 basis points on Wednesday, between the 3.5% - 3.75% target range, as widely expected.

This marked the third and final rate cut of 2025, as the bank had held the rate unchanged in the five previous meetings before cutting it at its September meeting.

The Fed said available data suggested that economic activity has been expanding at a moderate pace.

"Job gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments," said the central bank.

It noted that inflation has moved up since earlier in the year and remains "somewhat" elevated.

The Fed said the Federal Open Market Committee (FOMC), which makes decisions about interest rates, seeks to achieve maximum employment and inflation at the rate of 2% in the longer run.

"The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months," it emphasized.

The Fed said in considering the extent and timing of additional adjustments to the target range for the policy, the FOMC will "carefully" assess incoming data, the evolving outlook, and the balance of risks.

"The Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis," it added.

The decision to lower the rate by 25 basis points was supported by nine of 12 governors, with Stephen Miran supporting a 50 basis point cut and Jeffrey Schmid and Austan Goolsbee voting for no change.

The central bank had kept the rate at the historically high level of 5.5% from July 2023 to September 2024 before gradually lowering it to 4.5% last December.