The US Federal Reserve has lowered interest rates for the first time this year, flagging slower job gains and risks to employment as policymakers face heightened pressure under President Donald Trump.
The Fed on Wednesday cut the benchmark lending rate by 25 basis points, to a range between 4.0 percent and 4.25 percent, while penciling in two more cuts this year.
Only new Fed Governor Stephen Miran — who has been serving as an economic adviser to Trump — voted against the decision. He favoured a larger rate reduction of 50 basis points.
The other 11 voting members of the rate-setting Federal Open Market Committee (FOMC) voted for the quarter-point cut.
This was the first rate meeting involving Miran, who had been chairing the White House Council of Economic Advisers.
He was sworn in just before the two-day gathering started on Tuesday, after a swift Senate confirmation on Monday night.
The central bank faces competing pressures in adjusting rates, with Trump's sweeping tariffs fueling inflation risks while the job market weakens.
The Fed typically holds rates at higher levels to bring inflation back to its two-percent target, but could slash rates to support the labor market too.
On Wednesday, the Fed lifted its 2025 growth forecast to 1.6 percent from June's 1.4 percent projection.
It made no change to its unemployment and inflation forecasts.
Trump's pressure on Fed
Trump has intensified pressure on the Fed this year, calling repeatedly for major rate cuts and criticising Fed Chair Jerome Powell.
Besides appointing Miran when another official retired early, Trump moved in August to fire Fed Governor Lisa Cook, sparking a legal fight that could have prevented her from attending the gathering.
Economists had expected more division among the FOMC as policymakers walk a tightrope balancing inflation and labor market risks.
This time, employment concerns won out, even as inflation remains above 2.0 percent.
The Fed said in a statement announcing its rate cut that "downside risks to employment have risen," even as inflation has "moved up and remains somewhat elevated."
It noted that job gains have slowed while the unemployment rate has inched up -- even as it "remains low."
All eyes are now on Powell's press briefing, which takes place shortly after the rate decision is unveiled.
The expectation of two more rate cuts this year is slightly more than anticipated previously.
The Fed made its last rate cut in December, and had held interest rates steady all year as it monitored the effects of Trump's tariffs on inflation.
The impact so far appears limited but economists warn their full effects have yet to materialise.
