• The Federal Reserve cuts interest rates by 0.25 percentage points for the third time in a row.
• The new rate range is between 3.50% and 3.75%, the lowest in three years.
• Fed Chair Jerome Powell indicates a cautious approach to future rate cuts due to economic uncertainty.
• Internal divisions among Fed officials reflect conflicting views on managing inflation and job growth.
• Market expectations differ from the Fed's projections regarding future rate cuts for the next two years.

The US Federal Reserve has announced a 0.25 percentage point cut to its benchmark interest rate, marking the third consecutive cut, resulting in a new rate range of 3.50% to 3.75%—the lowest level in over three years. This decision comes against the backdrop of a divided committee, with three officials dissenting on the proposed rate cut during the vote, reflecting internal disagreements regarding future monetary policy directions. President Donald Trump immediately suggested that the Fed could have opted for a deeper cut, indicative of the political pressures surrounding the central bank's decisions, according to Reuters, CBS News, Al Jazeera, BBC.

Amid ongoing gaps in economic data caused by the recent government shutdown, policymakers are facing challenges in navigating competing priorities, as job growth has appeared to stall while inflation remains elevated. Job gains have slowed and the unemployment rate rose to 4.4%, leaving the Fed balancing between stimulating growth and controlling inflation, which recently registered at 2.8%, still above the targeted 2%. The Fed's economic projections indicated a potential cautious approach moving forward, as futures markets still expect at least two further rate cuts by 2026, a stark contrast to the Fed's more conservative outlook that anticipates only one cut in the next year, according to Los Angeles Times, SFGate, Channel News Asia.

At a subsequent press conference, Fed Chair Jerome Powell emphasized the committee's intention to assess incoming data carefully before making further changes. “Monetary policy is not on a preset course,” he noted, suggesting that future decisions would adapt based on labor market conditions and inflation dynamics. The looming uncertainty over inflation and monetary policy direction has left investors and marketplace observers in a cautious position as they navigate this evolving economic landscape, further complicated by Trump's potential appointment of a new Fed Chair before Powell's term ends in May 2026, which could significantly shift the Fed's monetary policy trajectory, according to India Times, Le Monde, and Reuters.