US Fed Cuts Rates as Labour Market Risks Rise

The US Federal Reserve reduced its target range for the federal funds rate by 25 basis points to 3.5–3.75 per cent, shifting its focus toward emerging risks in the labour market while maintaining its inflation-control stance.

The move follows months of moderating economic momentum, with job gains slowing and unemployment ticking higher through September, even as overall output continues to grow at a modest pace.

Recent indicators have reinforced the picture of a cooling jobs market alongside inflation that has climbed from earlier lows and remains moderately elevated, leaving policymakers cautious about the trajectory of price pressures and employment.

In its statement, the Federal Open Market Committee said uncertainty around the economic outlook remains high and that downside risks to employment have increased in recent months. The Fed reiterated its long-term goals of maximum employment and two per cent inflation, stressing that any further policy adjustments will depend on incoming data and the broader risk environment.

Officials also underscored their commitment to restoring price stability without undermining labour-market conditions.

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The central bank confirmed that reserve balances in the financial system have declined to ample levels and said it will begin purchasing shorter-term US Treasury securities as needed to maintain sufficient liquidity.

The decision comes as global economic signals remain mixed, with shifts in inflation, commodity markets and manufacturing orders across major economies adding to the uncertain backdrop for monetary policy.