Federal Reserve cuts key rate by quarter-point and signals two more cuts this year

FILE- In this Feb file photo the seal of the Board of Governors of the United States Federal Reserve System is displayed in the ground at the Marriner S Eccles Federal Reserve Board Building in Washington AP Photo Andrew Harnik File AP Andrew Harnik FILE- In this Feb file photo the seal of the Board of Governors of the United States Federal Reserve System is displayed in the ground at the Marriner S Eccles Federal Reserve Board Building in Washington AP Photo Andrew Harnik File AP Andrew Harnik WASHINGTON AP The Federal Reserve cut its key interest rate by a quarter-point Wednesday and projected it would do so twice more this year as concern grows at the central bank about the medical of the nation s labor field The move is the Fed s first cut since December and lowered its short-term rate to about down from Fed administrators led by Chair Jerome Powell had kept their rate unchanged this year as they evaluated the impact of tariffs tighter immigration enforcement and other Trump administration policies on inflation and the economic activity Yet the central bank s focus has shifted rapidly from inflation which remains modestly above its target to jobs as hiring has grounded nearly to a halt in latest months and the unemployment rate has ticked higher Lower interest rates could reduce borrowing costs for mortgages car loans and business loans and boost development and hiring In this less dynamic and somewhat softer labor sphere the downside risks to employment appear to have risen Powell explained at a press conference following the Fed s two-day meeting Fed authorities also signaled that they expect to reduce their key rate twice more this year but just once in which may disappoint Wall Street Before the meeting investors had projected five cuts for the rest of this year and next Just one Fed policymaker dissented from the decision Stephen Miran who President Donald Trump appointed and was established by the Senate in a rushed vote late Monday just hours before the meeting began Miran preferred a larger half-point cut but Powell stated reporters there wasn t very much patronage for the bigger-size cut among Fed leaders Numerous economists had forecast there would be additional dissents and the meeting s outcome suggests that Powell was able to patch together a show of unity from a committee that includes Miran and two other Trump appointees from his first term as well as a Fed governor Lisa Cook whom Trump is seeking to fire The Fed is facing both a challenging economic surroundings and threats to its traditional independence from day-to-day politics At the same time that hiring has weakened inflation remains stubbornly elevated It rose in August from a year ago according to the consumer price index up from in July and noticeably above the Fed s target It s peculiar to have weaker hiring and elevated inflation because typically a slowing financial market causes consumers to pull back on spending cooling price hikes Powell suggested last month that sluggish increase could keep inflation in check even if tariffs lift prices further Separately Trump s attempted firing of Cook is the first time a president has tried to remove a Fed governor in the central bank s -year history and has been seen by a great number of legal scholars as an unprecedented attack on the Fed s independence His administration has accused Cook of mortgage fraud but the accusation has come in the context of Trump s extensive criticism of Powell and the Fed for not cutting rates much faster and steeper An appeals court late Monday upheld an earlier ruling that the firing violated Cook s due process rights A lower court had also previously ruled that Trump did not provide sufficient justification to remove Cook Also late Monday the Senate voted to approve Miran s nomination and he was briskly sworn in Tuesday morning On Tuesday Trump announced Fed authorities have to make their own choice but added that they should listen to smart people like me Trump has revealed the Fed should reduce rates by three full percentage points The Fed s move to cut rates puts it in a different spot from countless other central banks overseas Last week the European Central Bank left its benchmark rate unchanged as inflation has largely cooled and the market has seen limited damage so far from U S tariffs On Friday the Bank of England is also expected to keep its rate on hold as inflation at remains higher than in the United States Source