BREAKING: Federal Reserve cuts interest rate, predicts just one cut in 2026

The committee voted 9-3 in favor of the cut, with Governor Stephen Miran and regional presidents Jeffrey Schmid of Kansas City and Austan Goolsbee of Chicago voting against, per CNBC. One cut is predicted for 2026 and another in 2027. The committee expects inflation to remain above the 2 percent target until 2028.

Federal Reserve Chair Jerome Powell told reporters that inflation has remained "somewhat elevated" due to tariffs. "These readings are higher than earlier in the year, as inflation for goods has picked up, reflecting the effects of tariffs," referring to the rise in personal consumption expenditures (PCE) and core PCE.

"A reasonable base case is that the effects of tariffs on inflation will be relatively short-lived, effectively a one-time shift in the price level. Our obligation is to make sure that a one-time increase in the price level does not become an ongoing inflation problem, but with downside risks to employment having risen in recent months, the balance of risks has shifted. Our framework calls for us to take a balanced approach in promoting both sides of our dual mandate," he said.

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