The Federal Reserve has cut interest rates by 25 basis points, bringing its benchmark rate to a targeted range of between 3.75% to 4%.
The Federal Open Market Committee (FOMC) made the decision on October 29 with a 10-2 vote.
This is the second interest rate cut this year after the central bank reduced interest rates by 25 basis points in September.
The S&P 500 and Dow fell after Federal Reserve Chairman Jerome Powell said officials disagreed on whether to cut interest rates again in December, but he did not give any hints on the FOMC’s next move.
“A further reduction in the policy rate at the December meeting is not a foregone conclusion, far from it,” Powell told reporters at a news conference in Washington.
“In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December,” Powell said.
The Fed chairman said there was “a growing chorus” to “at least wait a cycle” before making another cut.
Recently appointed Fed Board Governor Stephen Miran dissented, as he was in favor of larger interest rate cuts, while Kansas City Fed President Jeffrey Schmid was in total opposition to the cuts, supporting no cut at all.
The Fed further announced that it would end its policy of quantitative tightening or QT on Dec. 1 by halting the reduction of its asset purchases.
The FOMC report said that it is having problems with a lack of key economic data, as the federal shutdown has put a halt to the collection of reports on employment and inflation.
Meanwhile, Powell said that the Fed is monitoring recent major layoffs among large American companies “very, very carefully.”
“You see a significant number of companies either announcing that they are not going to be doing much hiring or actually doing layoffs, and much of the time they’re talking about AI and what it can do,” Powell said.
“Although official employment data for September are delayed, available evidence suggests that both layoffs and hiring remain low, and that both households’ perceptions of job availability and firms’ perceptions of hiring difficulty continue to decline in this less dynamic and somewhat softer labor market,” he said.
“The downside risks to employment appear to have risen in recent months,” noted the Fed chair.
Amazon announced this week that it would cut 14,000 jobs, while Paramount said it would slash least 1,000 workers across its various divisions, including CBS News.
UPS will also be laying off 48,000 employees, and Target said it planned to eliminate 1,800 corporate jobs.
Inflation continued to hover above the Fed’s 2% goal; the CPI report last week showed annual inflation rates at 3%, due to higher energy costs and issues related to the Trump Administration’s tariffs.
With analysts pessimistic about another rate cut this year in December, the Dow Jones Industrial Average dropped 74 points (or 0.2 percent at closing), the Nasdaq rose 0.6 percent, and the S&P 500 remained flat.
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