Fed cuts interest rates as inflation, housing costs strain Americans
The Federal Reserve delivered new economic relief this morning, cutting interest rates by a quarter point in an effort to support borrowing and stabilize the slowing economy.
(NBC)- The Federal Reserve delivered new economic relief this morning, cutting interest rates by a quarter point in an effort to support borrowing and stabilize the slowing economy. Fed Chair Jerome Powell said the latest move reflects signs of improvement across key sectors.
“Economic activity has been expanding at a moderate pace,” Powell said. “Consumer spending appears to have remained solid, and business fixed investment has continued to expand.”
Still, Powell cautioned that challenges remain, pointing to a softening labor market. “Gradual cooling in the labor market has continued,” he noted. “Unemployment is now up three-tenths from June through September.”
The Fed’s third rate cut of the year sent stocks surging, with major indexes closing at new highs. The lower rate is expected to help consumers with credit card APRs, auto loans, and other borrowing costs — offering modest financial relief for households.
But Powell remained non-committal about additional cuts, saying: “We are well positioned to wait and see how the economy evolves.”
One major obstacle: stubborn inflation, which continues to weigh heavily on Americans. President Trump addressed price pressures Wednesday, saying, “We inherited high prices. We’re bringing them down very rapidly… They’ll soon be down at very good levels.”
However, government data shows annual inflation at 3%, the highest level of Trump’s second term. A new poll finds nearly half of Americans say they struggle to afford everyday essentials.
Powell suggested one key force driving inflation higher is the administration’s trade policy. “It’s really tariffs that’s causing most of the inflation overshoot,” he said.
Beyond inflation, many Americans are also feeling strained by the housing market. The median age of a first-time homebuyer has climbed to 40 years old, an all-time high — highlighting how affordability challenges are delaying homeownership for millions.
When asked if the latest rate cut could meaningfully ease housing costs, Powell was candid: “I don’t know that a 25-basis-point decline in the federal funds rate is going to make much of a difference for people.”
As policymakers weigh future steps, the Fed says it will continue monitoring inflation, employment, and global financial conditions to determine whether more action is needed.
