US Fed approves third rate cut this year

A US Federal Reserve split over where its priorities should lie cut its key interest rate Wednesday, but signaled a tougher road ahead for further reductions, Report informs via CNBC.

Fulfilling expectations of a "hawkish cut," the central bank's Federal Open Market Committee lowered its key overnight borrowing rate by a quarter percentage point, putting it in a range between 3.5%-3.75%.

However, the move carried caution flags about where policy is headed from here and featured "no" votes from three members, which hasn't happened since September 2019.

The 9-3 vote again featured hawkish and dovish dissents – Governor Stephen Miran favored a steeper half-point reduction while regional Presidents Jeffrey Schmid of Kansas City and Austan Goolsbee of Chicago backed holding the line. In Fed parlance, hawks are generally more concerned about inflation and favor higher rates while doves focus on supporting the labor market and want lower rates.

This was the third consecutive "no" vote from Miran, who leaves the Fed in January, and the second straight from Schmid. The previous three-dissent meeting also featured a 2-1 divide from members conflicted between the need for tighter and looser monetary policy.