The U.S. Federal Reserve has lowered interest rates once more, voting to cut its benchmark rate by 0.25 percentage points to a range of 3.5%–3.75% – the lowest level in roughly three years. It is the Fed’s third cut of 2025 and comes after weeks of market speculation about whether policymakers would risk another move while inflation is still above target.:contentReference[oaicite:0]{index=0}
The decision was not unanimous. According to reporting on the meeting, the Fed’s policy committee voted 9–3 in favour of the cut. Two officials argued that rates should remain unchanged, while one pushed for a larger, half-point reduction – the biggest internal split since 2019 and a sign of how divided the central bank is over what to do next.:contentReference[oaicite:1]{index=1}
Why the Fed cut – again
On paper, the Fed has a simple job: keep prices stable and employment strong. In practice, the data are sending mixed signals. Inflation remains above the central bank’s 2% goal, which would normally argue for keeping policy tight. At the same time, recent labour-market data point to slower hiring and a modest rise in unemployment, strengthening the case for easing.:contentReference[oaicite:2]{index=2}
The compromise was another small cut paired with cautious messaging – what some economists call a “hawkish cut.” The Fed wants to support a cooling jobs market without signalling that borrowing will get dramatically cheaper any time soon.
Who wins and who loses from lower rates
For households and businesses, the rate cut is part of a slow turn in the credit cycle. Over time, it can mean slightly lower costs on new variable-rate loans, business credit lines and, eventually, some forms of consumer debt. Fixed-rate mortgages and car loans move more slowly, but expectations of easier policy can help push long-term yields down as well.
For savers, the news is more mixed. After several years of unusually high yields on savings accounts and money-market funds, further cuts could gradually erode those returns. Bond markets, meanwhile, are already repricing the Fed’s path for 2026, with traders debating whether this will be the final cut or the start of a longer easing cycle.:contentReference[oaicite:3]{index=3}
Global ripple effects – from Beirut to emerging markets
Because the dollar is still the world’s main reserve currency, Fed decisions rarely stay inside U.S. borders. Lower U.S. rates can ease pressure on heavily indebted countries, support risk appetite in global markets and influence everything from oil prices to capital flows into emerging economies. For investors and policymakers in Lebanon and the wider region, the move is another signal that the era of peak global interest rates is likely behind us, even if inflation remains a concern.
What to watch next
While markets had largely priced in this cut, the real story is what comes next. Fed projections now tentatively point to the possibility of one more reduction in 2026, but officials are split, and incoming data could easily change the script. Traders will parse every line of Fed Chair Jerome Powell’s speeches for clues about how worried the central bank really is about growth versus inflation.:contentReference[oaicite:4]{index=4}
For households, the takeaway is simple: do not expect a return to near-zero interest rates, but be aware that borrowing conditions may slowly improve. For investors, volatility around each data release and Fed meeting is likely to remain high, making risk management just as important as chasing returns.
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