Fed cuts benchmark rate by 25bps for third time this year

Summary

The Federal Reserve announced its third rate cut of the year, lowering the federal funds rate by 25 basis points to a range of 3.5% to 3.75%. This decision was supported by nine members, with three opposing, highlighting internal divisions. The move aims to stabilize the labor market and control inflation, amidst mixed economic signals.Zhitong+ 3

Impact Analysis

So, the Fed’s third rate cut this year is a clear signal they’re worried about the economy—employment’s softening, inflation’s not as hot as they’d like, and there’s pressure from tariffs. But what’s really interesting is the internal split: 9-3 vote shows not everyone’s on board with this path. Powell’s trying to balance labor market stability with inflation control, but the dissent suggests some think we’re either overreacting or not doing enough. Markets reacted predictably—stocks up, dollar down, gold up—but the real story is what happens next. If the Fed’s divided now, how will they handle 2026 when opinions are already mixed? For us, this means watching for volatility in rate-sensitive sectors and maybe positioning for more defensive plays if the Fed’s indecision leads to market uncertainty. Keep an eye on the bond market too—could be some interesting moves there as this plays out.Zhitong+ 3