As expected, the Federal Reserve made another move on Wednesday, cutting its benchmark interest rate by a quarter point for the second time in less than two months.
It’s the second time the central bank lowered the rate metric in six weeks and one of two cuts the bank previously signaled could be coming this year. In comments at the central bank’s September meeting, authorities teased more interest rate cuts before the new year, though Fed chair Jerome Powell cast uncertainty over that in public comments on Wednesday.
“Available indicators suggest that economic activity has been expanding at a moderate pace,” the Fed said in a statement, which also acknowledged that inflation remains elevated and the unemployment rate “edged up but remained low through August.”
Chair Jerome Powell said the meeting included “strongly differing views about how to proceed in December,” when the agency was expected to make a third rate cut.
“A further reduction in the policy rate at the December meeting is not a foregone conclusion,” said Powell. “Far from it.”
A majority of the Federal Open Market Committee voted for the quarter-point cut, but the decision was not unanimous. Stephen Miran, a Fed governor and close ally of President Donald Trump, voted for a larger cut, while another governor voted against any cuts altogether. It’s uncommon for governors to vote on both sides of a decision.
“The cut may not dramatically change transaction volume overnight, but it strengthens the sentiment that’s been driving activity, proving that we’re finally operating in a more constructive, stable environment,” Herbert Smith Freehills Kramer’s Dan Berman told Bisnow.
After hiking rates in the wake of the pandemic, the Fed announced a half-point cut last fall, only to hit the pause button in favor of efforts to control inflation.
In recent months, Trump and his allies made direct efforts to assert influence over the Fed.
The president himself has conducted a pressure campaign on the independent institution, attacking the chair and citing expensive renovations of the bank’s headquarters as a potential means for removal.
He’s also been attempting to fire one of the Fed’s governors, Lisa Cook, for alleged mortgage fraud. That attempt has been unsuccessful so far.
Many in the real estate industry support rate cuts, bullish on how lower rates could spark commercial transactions and unlock supply in the housing market.
The average mortgage rate recently hit 6.19 percent, the lowest in more than a year, according to Freddie Mac. But mortgage rates don’t directly correspond to the Fed’s interest rates; they track more closely to the 10-year Treasury note.
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