Fed cuts rate 25 bps, Powell flags uncertain December move, runoff ends

The Federal Reserve on Wednesday cut its benchmark interest rate by 25 basis points, lowering the federal funds target to a range of 3.75 percent to 4.00 percent, but Chair Jerome Powell warned that a further reduction at the Fed's December meeting is far from guaranteed. Powell said officials remain sharply divided over the next steps and that policy will depend on incoming data, noting upside risks to inflation and downside risks to employment. The Fed also announced it will end its balance sheet runoff on December 1.

The move was the second consecutive monthly cut and was widely anticipated by investors, but Powell's cautious postmeeting tone prompted an immediate market repricing. The yield on the 10-year Treasury rose, climbing above 4.09 percent, and the U.S. dollar strengthened to its highest level since August. Equities were mixed, with major indexes retreating modestly after earlier gains.

Powell framed the decision as a step toward a more neutral stance while stressing uncertainty. "A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it," he said, adding that the Fed is "not on a preset course." Officials cited a...