The U.S. Federal Reserve on Wednesday stateside cut interest rates by a quarter point, bringing the overnight funds rate range between 4% and 4.25%. That move was fully priced in markets — so traders got what they expected.
It was a near-unanimous decision by the Fed. Only Stephen Miran, picked by U.S. President Donald Trump and confirmed to the Fed board just on Monday, dissented and voted for a half-point cut. Prior to the meeting, there was chatter that governors Michelle Bowman and Christopher Waller — both of whom were also appointed by Trump — might advocate for a larger cut.
While Fed unity projects an image of independence, bolstering its credibility in the eyes of financial markets, the expected rate cut did little to cheer markets.
A majority of central bank officials see only one cut in 2026, far fewer than traders had been pricing in, according to the CME FedWatch tool. The dot plot also showed disparity in rate projections for next year, which means uncertainty over economic outlook. And Chair Jerome Powell characterized the cut as “risk management,” suggesting that the Fed was lowering rates out of caution rather than seeing it as necessary to support the labor market.
The S&P 500 edged down 0.1% and the Nasdaq Compositelost 0.3%. Only the Dow Jones Industrial Average rose, adding 0.6%.
Markets for now have not really cheered the Fed move — awaiting Trump’s calls for a 100 basis point cut to materialize?