(AURN News) — Federal Reserve Chair Jerome Powell announced Wednesday that the central bank will cut interest rates by a quarter point, citing slower growth and rising risks.
“Recent indicators suggest that growth of economic activity has moderated,” Powell said. “GDP rose at a pace of about 1.5% in the first half of the year, down from 2.5% last year. The moderation in growth largely reflects a slowdown in consumer spending. In contrast, business investment in equipment and intangibles has picked up from last year’s pace. Activity in the housing sector remains weak.”
“In the labor market, the unemployment rate edged up to 4.3% in August but remains little changed over the past year at a relatively low level,” he said.
“Payroll job gains have slowed significantly to a pace of just 29,000 per month over the past three months. A good part of the slowing likely reflects a decline in the growth of the labor force, due to lower immigration and lower labor force participation.”
Powell also stressed that inflation remains above the Fed’s long-run goal of 2%.
“Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people,” he said.
He also acknowledged that tariffs have fueled price increases. “Risks to inflation are tilted to the upside and risks to employment to the downside — a challenging situation,” Powell said.
The announcement comes as weak job numbers, rising prices from tariffs and a sluggish housing market weigh on the U.S. economy.
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