WASHINGTON — The Federal Reserve on Wednesday voted to drop the benchmark interest rate by a quarter point as the U.S. continues to struggle with inflation, a flagging labor market and a government shutdown.
In a statement, the central bank said available indicators suggested economic activity has been expanding at a moderate pace, but job gains have slowed this year, and the unemployment rate has edged up. Inflation has also moved up since earlier in the year and remains somewhat elevated.
The Federal Reserve Open Market Committee (FOMC) said it wants to achieve “maximum employment and inflation” at the rate of 2% percent over the longer run, but 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 central bank said.
FOMC voted to lower the target range for the federal funds rate by to 3¾-4% and promised to consider additional adjustments to the target range for the federal funds rate, “carefully assessing incoming data, the evolving outlook and the balance of risks.”
Federal Reserve Chairman Jerome Powell and 9 others on the Board of Governors voted for the quarter-point reduction, while one member voted against it due to wanting a half-percentage-point reduction and another voted for no change in the target range.
When the first interest rate drop was announced in September, the news was generally viewed as a positive for farmers and the floorplan rates for equipment dealers. Many economists predicted more cuts could be coming by year-end.
A report in Michigan Farm News published this week said that going back to 1977, producers have never spent so much to finance $1,000 of farm equipment debt.
For the first half of 2025, the cost was $154 for every $1,000 borrowed, said David Widmar, an ag economist for Farm News Media, citing data from the Kansas City Federal Reserve.
In recent years, the measure was approximately $135 in 2023 and 2024. In 2022, the expense was $100, and only $79 in 2021.
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