NEW YORK (Reuters) -The Federal Reserve cut interest rates by a quarter of a percentage point on Wednesday and indicated it will steadily lower borrowing costs for the rest of this year, as policymakers responded to concerns about weakness in the job market in a move that won support from most of President Donald Trump’s central bank appointees.
Only new Governor Stephen Miran, who joined the Fed on Tuesday and is on leave as the head of the White House’s Council of Economic Advisers, dissented in favor of a half-percentage-point cut.
MARKET REACTION:
STOCKS: Wall Street shares were mixed after the Fed cut rates: the Dow rose on the day, while the S&P 500 and the Nasdaq fell.BONDS: U.S. Treasury 10-year yields fell 2.9 basis points to 3.999%.FOREX: The dollar index slid 0.2% to 96.407.
COMMENTS:
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK:
“The Fed lowered its rate by 25 basis points, in line with expectations, and there was only one dissent. So that sort of closed the gap from the previous meetings. The new sworn-in governor was obviously for a 50-basis-point rate cut.”
“I would say that it’s pretty much a dovish statement. Yields that are moving a bit lower now and stocks are turning around to the upside.”
“The dot plot shows 75 basis points (total rate cuts in 2025), but that could change if the labor market continues to weaken. Inflation (expectations) moved up somewhat, but there aren’t many changes here. The market likes it.”
“Like I said, it’s a dovish statement. Now we’ll just have to see what the what Fed Chief Powell has to say during his press conference.”
TIM GHRISKEY, SENIOR PORTFOLIO STRATEGIST, INGALLS & SNYDER, NEW YORK:
“This is what the Fed has been holding in its back pocket, so it’s not a big surprise. Its the first cut in the while, but it’s not helping the market.”
“We’ve got a soft labor market, a bit of softness in housing. All that should be helped by lower rates.”
GUY LEBAS, CHIEF FIXED INCOME STRATEGIST, JANNEY CAPITAL MANAGEMENT, PHILADELPHIA:
“This was about as close to expectations as humanly possible (and) basically what was baked into markets ahead of time.”
“There was an acknowledgment that the risk is now skewed toward lower employment.”
On the lone dissenting vote from Miran: “I think it’s ridiculous to have a strong opposition right after you get a job.”
“The Fed is heading in the direction of being politically captured…It’s happened in the past and may be just a little more public this time around.”
“Given the level of growth and level of inflation…in 2026 and 2028 we can expect interest rates to be somewhat lower.”
“The probability that newly hired Fed members will ignore inflation risks is higher…All else equal that is likely going to steepen curve.”
(Compiled by the Global Finance & Markets Breaking News team)
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