A MARTÍNEZ, HOST:
The Federal Reserve on Wednesday lowered its benchmark interest rate for the second time in six weeks. As that decision filters through the economy, it should get a little bit cheaper to borrow money to buy a car, grow a business or just carry a balance on a credit card. The head of the central bank hinted that may be the last cut this year. Here's NPR's Scott Horsley.
SCOTT HORSLEY, BYLINE: By cutting its benchmark interest rate by a quarter percentage point, the Federal Reserve is trying to cushion the slowdown in the U.S. job market. Hiring has dropped sharply in recent months, and some big employers have announced widespread layoffs. While the unemployment rate at last count was still relatively low, Fed Chairman Jerome Powell and his colleagues want to prevent the job market from weakening any further.
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JEROME POWELL: A stronger labor market is the best thing we can do for the public. It's also part of our job, along with keeping prices stable.
HORSLEY: For much of the year, the central bank kept interest rates relatively high in an effort to curb stubborn inflation. Prices are still climbing faster than the Fed would like, but not nearly as fast as they were a few years ago. Powell acknowledged many shoppers still bristle at the cumulative price hikes since the pandemic.
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POWELL: It's nice that - you know, that prices are not going up as fast as they were. But they're still much higher than they were, and it'll take some time for that effect to wear off.
HORSLEY: President Trump's tariffs are also putting upward pressure on prices, although Powell and some of his colleagues think tariffs' inflationary impact will be limited. Getting a good read on the economy is particularly challenging right now, since much of the government data the Fed would ordinarily rely on has been suspended by the federal shutdown. And there's a wide range of views on the Fed's rate-setting committee. One member of the committee voted for a bigger half-point interest rate cut yesterday, while another voted not to cut rates at all. Powell says that disagreement is likely to resurface at the next Fed policy meeting in December.
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POWELL: In the committee's discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a foregone conclusion - far from it.
HORSLEY: That was disappointing to investors, who had been fairly confident that the central bank would cut its benchmark rate by another quarter percentage point before the end of this year. Market odds of a December rate cut fell after Powell's news conference yesterday, and so did the Dow Jones Industrial Average.
Scott Horsley, NPR News, Washington.
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