The U.S. Federal Reserve (Fed) on Wednesday announced its decision to lower the target range for the federal funds interest rate by 25 basis points to 3.5-3.75 percent. U.S. President Donald Trump said the cut could have been larger.
This marks the Fed's third rate cut this year and its sixth since September 2024.
The Federal Open Market Committee (FOMC), the Fed's policymaking body, said on Wednesday in a post-meeting statement that current indicators suggest economic activity has been expanding at a modest pace, job gains have slowed this year, the unemployment rate has edged up, and inflation has risen since the start of the year and remains elevated.
Data issued by Automatic Data Processing, Inc. (ADP) showed that U.S. private companies cut 32,000 workers in November, defying economists' expectations for an increase of 40,000 for the month.
Small businesses with fewer than 50 employees lost 120,000 jobs in November, while mid-sized and large establishments continued to add jobs in the period, according to the ADP.
Uncertainty about the economic outlook remains elevated, and downside risks to employment have increased in recent months. In light of the change in the risk balance, the Committee decided to lower the target range for the federal funds rate by 25 basis points.
Previously, Fed officials were divided over the impact of tariff policies on inflation and whether to cut rates further in December, but deteriorating U.S. jobs data heightened expectations for a rate cut.
At a press conference on Wednesday, Fed Chair Jerome Powell said the Fed has cut rates by 75 basis points across three meetings this year. This further normalization of policy stance will help stabilize the labor market while allowing inflation to resume its downward trend toward the 2 percent target once the effects of tariffs have passed through.
Powell also noted that U.S. tariff policies have contributed to higher inflation.
In response, Trump stated that economic growth does not mean inflation, and even if inflation occurs, it is acceptable as it can be slowed down. Trump also said the rate cut was too small and could have been larger.
The president has repeatedly criticized Powell publicly over Fed monetary policy.
After taking office again in January this year, Trump accused the Fed of cutting rates too slowly and threatened to replace Powell. This has sparked widespread concern over the Fed's ability to maintain its monetary policy independence.
Speaking about candidates for Fed Chair, Trump said he would meet that day with one candidate, former member of the Fed board of governors Kevin Warsh. Trump said he wants someone who is "honest about interest rates" and wishes rates could be "much lower".
He stated that U.S. rates should be the lowest in the world.
Additionally, another candidate for the position, Kevin Hassett, head of the White House National Economic Council, said on Wednesday that the Fed has ample room to cut rates and may need to cut further. Hassett stated that stronger economic data could support a 50-basis-point cut.
On the 25-basis-point cut, nine of the 12 FOMC members voted in favor, while three dissented. One member preferred a 50-basis-point cut, and the other two preferred to maintain the rate.
This is reportedly the first time since 2019 that so many dissenting votes have occurred.
Trump urges bigger move as US Fed makes 3rd interest rate cut
A World Health Organization (WHO) medical epidemiologist on Sunday sought to ease public concerns over a hantavirus outbreak linked to a cruise ship, stressing that the virus is not airborne like COVID-19 and that the average person has no reason to worry.
Spain began evacuating passengers the same day from the hantavirus-stricken cruise ship MV Hondius, which had anchored earlier off the Port of Granadilla on the island of Tenerife.
The MV Hondius departed Argentina on April 1 with more than 140 passengers and crew from 23 countries on board. The ship has reported eight infections, including three deaths. Six of the cases have been laboratory-confirmed as Andes virus infections, caused by a rodent-borne hantavirus endemic to South America and the only known hantavirus strain capable of limited human-to-human transmission.
Boris Pavlin, a medical epidemiologist with the WHO, said the cruise ship affected by a hantavirus outbreak had been carefully managed by Spanish authorities and posed little risk to the general public. "This is not COVID. The average person does not need to be worried about hantavirus here in this setting. These folks are being managed very carefully, very deliberately, by the Spanish authorities; they're getting off the ship, they are getting into small boats, they are being spaced apart in the buses so there's no risk to one another. Even if one were to become symptomatic -- we know that none of them were symptomatic as they have been leaving the ship -- they're going straight to their aircraft and they're being taken to their respective national jurisdictions," he said.
Pavlin said the exact source of exposure remained under investigation, but the initial cases appeared to be linked to a pre-cruise land excursion in South America.
"From what we understand of the initial cases, there was -- as one does often on a cruise -- there was a land-side excursion before the cruise in which places were visited that are home to these specific rodents that are associated with the Andes hantavirus. These are not worldwide rodents; the long-tailed rice rat is very specific to the Andes Cordillera region of South America, and that's where people who are exposed to the rodents were. So it was in one of those places they were exposed. We don't know exactly because there are several possibilities, and I believe that the Argentinian authorities are actually even going to look at that and try to do some animal sampling to get to the very bottom of it. But that part's not unexpected at all," he said.
The official praised Spanish authorities' handling of the ship and described the response as a closely coordinated international effort.
"This has been an extremely cooperative, collegial international effort. The Spanish authorities are very diligent and deliberate about what's happening here. There's nothing that would surprise us. I think that somebody might become exposed; we want to obviously make sure that people who are coming off the ship are not newly exposed to one another as they get off and go to their respective places, and we're not seeing that," Pavlin said.
But while the immediate disembarkation process had gone smoothly, he emphasized that health officials were not letting their guard down.
"However, the contact tracing and follow-up of every person who has been in even the lightest contact with the patients will continue until a maximum incubation period. In any case, there are contingency plans should someone become ill, and we know that it doesn't just spread like wildfire, so even if they were to become ill, we don't expect a large outbreak after this," the official said.
Cruise ship hantavirus outbreak "not COVID," poses low public risk: WHO expert
