Photo: AFP
The Federal Reserve Bank has officially cut interest rates for a third time this year, by 25 basis points.
This comes as concerns continue about the strength of the labor market, which has been largely stagnant in recent months, despite other economic progress.
The new Benchmark federal funds rate is now in the range of 3.5-3.75%, following early rate cuts in both September and October.
Federal Reserve Chair Jerome Powell explained the rationale behind the cut, despite economic data lagging due to the recent government shutdown. "Although important federal government data for the past couple of months have yet to be released, available public and private sector data suggests that the outlook for employment and inflation has not changed much since our meeting in October," said Powell. "Conditions in the labor market appear to be gradually cooling, and inflation remains somewhat elevated."
Powell also took a subtle jab at President Trump's tariff policy when discussing inflation. "These readings are higher than earlier in the year, as inflation for goods has picked up, reflecting the effects of tariffs," he said.
Nonetheless, Powell added he expects those price hikes to be short-lived, and surprised investors by predicting stronger GDP growth for the economy heading into next year.
Trump, who has publicly criticized Powell for months and vowed to replace him when Powell's term is up next spring, told reporters that this interest rate could "could have been double" what it was.