Copyright Newsweek
The Federal Reserve cut its benchmark interest rate Wednesday for the second time this year, lowering it to about 3.9% as it seeks to support economic growth and hiring despite stubbornly high inflation. The move marks a continued shift from the aggressive rate hikes of 2023 and 2024, when the Fed pushed borrowing costs to a two-decade high to fight surging prices. “Job gains have slowed this year, and the unemployment rate has edged up but remained low through August,” the Fed said in its statement. With the government still unable to release new economic data due to the ongoing shutdown, the central bank said it is relying on private-sector indicators to guide policy decisions. The rate cut could gradually reduce costs for mortgages, credit cards, auto loans, and business borrowing, offering some relief to consumers and companies. Still, the Fed faces a difficult balancing act: trying to bolster hiring and prevent a recession while keeping inflation from rising further. Policymakers have hinted that another rate cut could come in December, though the lack of reliable economic data is adding to the uncertainty surrounding the path ahead. This is a breaking news article. Updates to follow. This article includes reporting by the Associated Press.
