Fed Cuts Rates Again As Inflation Stays High, Trump's Tariffs Strain Economy

By Chris Spiker From Daily Voice

The Federal Reserve has cut interest rates for the second time in six weeks as inflation remains high and the US labor market shows more signs of strain.

The Fed announced the approval of a quarter-point rate cut in a news release on Wednesday, Oct. 29. The move lowers the Fed's benchmark funds rate to between 3.75% and 4%.

The decision follows a string of weaker jobs reports and growing economic concerns surrounding President Donald Trump's widespread tariffs.

"Available indicators suggest that economic activity has been expanding at a moderate pace," the Fed said. "Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated."

The latest rate cut comes as inflation continues to weigh on household budgets. Federal data released earlier in October showed that the Consumer Price Index (CPI) rose 0.3% in September, pushing annual inflation to 3.0%.

Inflation remains well above the Fed's 2% goal.

"The committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run," the Fed said. "Uncertainty about the economic outlook remains elevated. The committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months."

The rate cuts are intended to ease borrowing costs on mortgages, car loans, and credit cards. The goal is to give consumers and businesses more flexibility as inflation pressures persist and job growth slows.

Trump's trade policies have fueled uncertainty, with tariffs driving up costs for imported goods and materials, pushing prices higher for many families and businesses. Economists at Goldman Sachs have estimated that Americans are paying more than half the total cost of tariffs, which have rippled through supply chains and fueled inflation.

The cut also comes as about 42 million Americans prepare to lose food assistance during the ongoing federal government shutdown. More than two dozen states are suing the Trump administration, accusing it of withholding emergency funds needed to keep the Supplemental Nutrition Assistance Program (SNAP) running.

The lawsuit argues that the Trump administration has the funding to continue SNAP payments but is choosing not to release it, creating widespread uncertainty for families heading into the holiday season. States are seeking an emergency court order to restart payments before November as food banks brace for higher demand across the Northeast.

The Fed's next policy meeting is scheduled for Wednesday, Dec. 17.