Fed Delivers a Third Straight Rate Cut Amid an Uncertain Economy
So, here’s what’s been happening today: the Federal Reserve has just cut interest rates for the third time in a row , taking another quarter point off borrowing costs. This move had been widely expected, but the context around it is what makes the story so interesting — and honestly, a bit dramatic.
The decision was made during a year that has been anything but smooth for the Fed. Inflation has been running hotter than they’d like, with the latest reading from their preferred gauge — the Personal Consumption Expenditures index — showing price growth at 2.8% , noticeably above the 2% target. Fed Chair Jerome Powell made it clear that tariffs introduced this year have been the biggest driver behind the overshoot. He essentially said that if tariffs were removed from the equation, inflation would be sitting comfortably in the low twos.
But inflation isn’t the only thing clouding the Fed’s vision. The government shutdown has disrupted the flow of official economic data, leaving Fed officials partially in the dark. Powell even pointed out that very little inflation data has been released since October. That means the Fed has had to rely more heavily on private-sector data — which is helpful, but not as reliable. Despite that, the available numbers still point to a labor market that’s cooling and inflation that’s rising, a tricky combination for policy-making.
Also Read:Given all that uncertainty, Powell signaled that after these three consecutive cuts, the Fed is ready to pause and observe how the economy evolves. It’s essentially a “wait and see” moment.
Looking ahead, the central bank’s projections for 2026 are surprisingly optimistic. Officials are expecting stronger GDP growth — about 2.3% — and slightly cooler inflation at 2.4% . But they’re only forecasting one rate cut next year. Markets don’t buy that at all. Many economists are already predicting more cuts, especially with political pressure rising and a new Fed chair expected in 2026.
And speaking of friction, this meeting saw three dissenting votes , the most since 2019. Some officials wanted a bigger cut, while others didn’t want a cut at all. That kind of division makes it harder to predict what’s coming next.
Wall Street, of course, was watching every second of this. Stocks nudged higher after the announcement, with traders now listening closely to Powell’s remarks for any clue about future moves.
In short, today’s rate cut was expected — but everything surrounding it suggests the road ahead is complicated. The economy is sending mixed signals, policymakers are split, data is delayed, and political heat is rising. The next few months are set up to be very interesting.
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