WASHINGTON—As many had forecast, the Federal Reserve’s Open Market Committee has voted to reduce the Fed funds rate by 25 basis points, doing so even though it lacks some of the data it typically factors into its decision-making as a result of the government shutdown.
Two Fed officials dissented with the vote being 10-2. Kansas City Fed President Jeffrey Schmid voted against the decision because he favored no change in rates, while Fed governor Stephen Miran dissented in favor of a larger half-point cut.
The moves marks the second such reduction of 25 basis points in 2025, and reduces the Fed’s benchmark short-term interest rate to a range between 3.75% and 4%, the lowest setting in three years and down from a peak of around 5.4% during most of 2024.
Separately, the Fed also said it will stop its now three-and-a-half-year effort to shrink the Fed’s $6.6 trillion asset portfolio on Dec. 1.
“The FOMC trimmed rates by 25 basis points at its next-to-last meeting of the calendar year,” noted America’s Credit Unions Chief Economist Curt Long. “Chair Powell’s press conference provided more intrigue, as he appeared to push back on the consensus view that another rate cut is coming in December. Reliable economic data will remain in scarce supply until the government reopens, which further clouds the outlook. Regardless of economic conditions, credit unions remain committed to assisting their members in times of need.”
About Mortgages
Many would-be homebuyers have been hoping a Fed rate cut will lead to lower mortgage rates, but one person says that’s unlikely.
“Mortgage rates have moved down notably in advance of the Fed’s meeting, hitting their lowest level in more than a year, but further declines will depend on new developments,” Realtor.com Chief Economist Danielle Hale said in a statement. “The Fed’s decisions are anticipated by the market, which means that the upcoming rate cut and several more over the next few months are already largely priced in.”
