Fed lowered the federal funds rate by 25 basis points to 3.75–4.00%, in line with expectations, but revealed a three-way split among policymakers. Governor Stephen Miran voted for a deeper 50bps reduction, while Kansas City Fed President Jeffrey Schmid preferred to hold rates steady. The outcome highlights differing views within the Committee over the balance between inflation control and downside risks to growth.
In its statement, the Fed offered no explicit forward guidance, reiterating that it will “continue to monitor incoming information” and stands ready to adjust policy as appropriate should new risks emerge.
The Committee described economic activity as expanding at a moderate pace, with job gains slowing and unemployment edging higher but still low through August. Inflation was noted as having moved up since earlier in the year and remaining “somewhat elevated.”
The Fed also acknowledged that uncertainty about the outlook remains elevated, with downside risks to employment having increased in recent months.
