Fed cuts rate to 3.5%–3.75% amid three dissents; NY Fed to buy $40B in T‑bills
The Federal Reserve cut its target federal funds rate to 3.5%–3.75% — its third cut this year — in a sharply divided vote with three dissents (Austan Goolsbee and Jeff Schmid favored holding; Stephen Miran wanted a larger cut) and several officials saying they would have preferred to hold. The Fed said it will buy short-term Treasuries as needed to maintain ample reserves, the New York Fed will begin buying about $40 billion in T‑bills starting Friday, and updated projections show only one additional cut penciled in for 2026 amid modestly stronger growth and easing inflation, with policymakers also weighing delayed economic data from the government shutdown.
📌 Key Facts
- The Federal Open Market Committee cut the federal funds target range to 3.50%–3.75%, its third cut this year (a third consecutive cut that puts the policy rate around 3.6%, the lowest in nearly three years).
- There were three formal dissents: Austan Goolsbee and Jeff Schmid preferred holding rates, while Stephen Miran voted for a larger (half‑point) cut and has been the lone half‑point dissenter at the last two meetings; additionally, six of 19 officials registered 'shadow dissents' saying it would have been appropriate to hold.
- The New York Fed will buy about $40 billion of short‑term Treasury bills starting Friday and the Fed said it will purchase short‑term Treasuries as needed to maintain ample reserves.
- Updated FOMC projections show a median path of only one additional rate cut in 2026, with seven of 19 officials seeing year‑end 2026 rates at or above current levels; the projections also revised 2026 GDP growth to a median of 2.3% (up) and inflation to about 2.4% (down).
- The Fed is releasing quarterly economic projections today and Chair Powell will hold a press briefing at 2:30 p.m. ET following the decision.
- Data reporting delays from a government shutdown have left the Fed relying on the latest available readings (September PCE inflation at 2.8% and unemployment at 4.4%) and entering the meeting with several months of backlogged jobs and inflation reports to review.
- Governance context: the Supreme Court has blocked President Trump's attempt to replace Fed Governor Lisa Cook and will hear arguments next month; Powell’s chair term expires in May and the White House is expected to nominate a new Fed chair.
📊 Relevant Data
In September 2025, the unemployment rate was 3.8% for White Americans (58% of population), 7.5% for Black Americans (13% of population), 5.5% for Hispanic Americans (19% of population), and 4.4% for Asian Americans (6% of population).
The Employment Situation - September 2025 — U.S. Bureau of Labor Statistics
In 2023, the poverty rate was 7.7% for non-Hispanic White Americans (58% of population), 17.1% for Black Americans (13% of population), 16.9% for Hispanic Americans (19% of population), and 9.8% for Asian Americans (6% of population).
Poverty in the United States in 2023 — Congressional Research Service
In 2023, the median household income was $89,050 for non-Hispanic White households (58% of population), $56,490 for Black households (13% of population), $65,540 for Hispanic households (19% of population), and $112,800 for Asian households (6% of population).
Median Income of Non-Hispanic White Households Increased While Asian, Black and Hispanic Median Household Income Did Not Change — U.S. Census Bureau
📰 Sources (4)
- FOMC cut the federal funds target range to 3.5%–3.75%, the third cut this year.
- Three dissents: Austan Goolsbee and Jeff Schmid favored holding rates; Stephen Miran favored a larger cut.
- Six of 19 Fed officials indicated it would have been appropriate to hold rates ('shadow dissents').
- Fed will purchase short‑term Treasuries as needed to maintain ample reserves; NY Fed anticipates buying ~$40B in T‑bills starting Friday.
- Median Fed projection shows only one additional cut in 2026; seven of 19 officials see rates ending 2026 at or above current levels.
- Updated projections: median 2026 GDP growth 2.3% (up) and inflation 2.4% next year (down from prior).
- Powell will hold a press conference at 2:30 p.m. EST today following the decision.
- A third consecutive cut would place the policy rate around 3.6%, the lowest in nearly three years.
- The Fed will release quarterly economic projections today; economists expect just one rate cut in 2026, though a new chair could push for more.
- AP quotes Wells Fargo’s Tom Porcelli saying the Fed would prefer to skip a January cut and wait for more inflation data, potentially pushing action to March.
- Shutdown-related data delays mean the Fed enters January with multiple months of backlogged jobs and inflation reports to review.
- NPR specifies the latest available readings the Fed is relying on due to the shutdown: September PCE inflation at 2.8% and unemployment at 4.4%, both slightly higher than the prior month.
- Notes investors are betting a majority of policymakers will back a quarter‑point cut at the end of this meeting.
- Details that Stephen Miran has cast the lone half‑point cut vote at each of the last two meetings.
- Adds governance context: Trump's attempt to replace Fed Governor Lisa Cook has been blocked by the Supreme Court, which will hear arguments next month.
- States Powell’s chair term expires in May and Trump is expected to nominate a new Fed chair soon.
- Recalls that in September, Fed officials projected on average just one additional rate cut in 2026.