(Bloomberg) — Federal Reserve officials delivered their second consecutive interest-rate reduction to support a softening labour market, and said they would stop shrinking the central bank’s portfolio of assets on Dec. 1.
In their post-meeting statement, Fed policy-makers on Wednesday repeated their assessment that “job gains have slowed” and said “risks to employment rose in recent months.”
Officials characterized economic growth as “moderate” and said inflation “has moved up since earlier this year and remains somewhat elevated.”
The Federal Open Market Committee voted 10-2 to lower the target range for the federal funds rate by a quarter percentage point to 3.75%-4%.
Fed officials on both ends of the policy spectrum opposed the decision. Governor Stephen Miran, who joined the central bank last month and is on unpaid leave from his post as chair of the White House Council of Economic Advisers, dissented again in favor of a larger, half-point reduction. Kansas City Fed President Jeff Schmid said he preferred not to cut rates at all, after supporting last month’s rate reduction.
The S&P 500 held gains, while Treasury yields and the dollar moved higher.
Fed officials lowered rates last month for the first time this year after a marked cool-down in hiring raised worries about fragilities in the labour market.
Wednesday’s move was widely anticipated after Powell said earlier this month that employment could weaken further. Additional declines in job openings, he said, “might very well show up in unemployment.”
Fed officials are divided, however, over how much more to ease. Several policy-makers have cautioned against lowering borrowing costs too rapidly with inflation still running above the Fed’s 2% target.
Rate projections released last month showed 9 out of 19 policy-makers expected no more than one additional rate reduction this year after last month’s cut, including seven who preferred no further moves in 2025.
The statement nodded to the fact that an ongoing government shutdown has limited their access to economic data. In describing the labour market, officials referenced the unemployment rate “through August.”
The Fed’s job is growing increasingly difficult as officials are forced to make policy decisions without most of the economic data they typically rely on. The shutdown has frozen or pushed back the compilation and release of reports tracking the labour market, prices, spending and other key indicators.
Policymakers did, however, receive a delayed report last week on the consumer price index. It showed underlying inflation rose in September at the slowest pace in three months. The figures were likely welcomed by officials worried about price pressures, but still showed core inflation rose 3% from a year earlier, well above the Fed’s goal.
Balance Sheet
The Fed said it would stop shrinking its portfolio of assets beginning Dec. 1, closing the book on a process that began in 2022. The Fed has since shed more than $2 trillion in Treasuries and mortgage-backed securities, bringing the balance sheet below $6.6 trillion, its smallest size since 2020.
The U.S. central bank made trillions of dollars in asset purchases to support the economy in the wake of the pandemic after lowering its benchmark rate close to zero.
–With assistance from Alex Harris.
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Last modified: October 29, 2025