The Jerome Powell-led US Federal Reserve’s Federal Open Market Committee (FOMC) on Wednesday cut its benchmark interest rate by 25 basis points, bringing it down to a range of 3.50% to 3.75%, even as inflation remains elevated across the economy.
“In support of its goals, and given the shift in the balance of risks, the Committee has decided to lower the target range for the federal funds rate by one-quarter percentage point to 3½ to 3¾ percent,” the FOMC said in its official statement.
The US Federal Reserve’s Federal Open Market Committee (FOMC) also acknowledged growing risks on both sides of its dual mandate price stability and employment.
In its latest policy statement, the Fed noted that downside risks to the labour market have increased in recent months, even as inflation remains above the central bank’s long-term comfort zone. Despite these challenges, the Committee reiterated its commitment to achieving maximum employment and returning inflation to its 2% target over time.
“Uncertainty about the economic outlook remains elevated. The Committee is attentive to risks on both sides of its mandate and judges that downside risks to employment rose in recent months,” the FOMC said in its statement.
On 29 October 2025, the US Federal Reserve announced a 25-basis-point cut to its benchmark interest rate, bringing it down to a range of 3.75%–4.00%. This marks the second rate reduction in the 2025 calendar year, coming at a time when inflation remains elevated and the US government continues to face a shutdown.
Fed Chair Jerome Powell noted that inflationary pressures have recently intensified, driven largely by an increase in goods prices. He attributed this trend to the tariffs imposed by President Donald Trump on imported foreign goods, which have raised input costs across several sectors.
Addressing speculation about further easing, Powell cautioned that a December rate cut is not a “foregone conclusion.”
