In line with market estimates, this Wednesday the Federal Reserve (the Fed) cut interest rates for the third consecutive time, setting them in a range between 3.5% and 3.75%. The decision came amid increased pressure from President Donald Trump to lower rates and after a government shutdown that limited recent economic information. The market anticipates that the year will also end with a 25-basis-point cut. At a conference on Wednesday, Governor Victoria Rodríguez assured that the decision taken by the Fed today is not a surprise, as it had been anticipated. This is due to persistent inflation above the 2% target, but a cooling labor market. In that context, the year's final vote looked divided: Vice President Stephen Mirran, aligned with Trump's directives, advocated for a stronger 50-basis-point cut; while the President of the Federal Reserve Bank of Chicago, Austan Goolsbee, and the Governor of the regional Fed branch in Kansas, Jeffrey Schmid, voted for a pause. In its statement, Jerome Powell stated that "the Fed seeks to achieve maximum employment and bring inflation to a 2% rate in the long term" and acknowledged that uncertainty about economic prospects remains high. Trump threatened to "kick the ass out of" Bessent. Additionally, Fed officials slightly adjusted their economic projection, estimating a 2.3% growth in 2026, five tenths above the expectation in September, with inflation at 2.4%. Despite the caution of some Fed officials, the statement also leaves the door open for more cuts next year by including in its statement that "they will consider additional adjustments". The Fed's announcement comes a week before the Bank of Mexico's (Banxico) meeting. "Today's statement does not change what was expected for 2026, and it is a relevant figure among the many we incorporate into our monetary policy decision," he said.
