After months of speculation, the federal reserve has cut America's interest rates.
On Wednesday, the 12-person board voted to bring rates down between four percent and 4.25 percent. It's the first cut since December 2024.
It's a major decision that could quickly impact American's wallets and job security. The Fed is staring down a potential stagflation crisis, marked by continued job losses and high inflation.
The rate is decided by a permanent seven-person board and five temporary regional presidents. They have a dual mandate to lower inflation and increase job growth through the government's borrowing rates.
Not all of the board members agreed with the modest interest change -- one governor voted to slash interest rates further, including five more cuts by the end of the year.
Another member voted to maintain rates, pointing to the economy's 53-month streak of above-target inflation.
Rates are used as a blunt tool, swinging higher when prices climb, and plunging when unemployment accelerates.
Lowered rates, which President Donald Trump prefers, could free up money for American consumers and businesses. That in turn boosts spending, stock prices, and 401(k) accounts.
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But it could also make inflation even worse. In recent meetings, that mandate has put the Fed in a tricky situation.
In August, inflation ticked higher, making some economists hope for higher interest rates.
At the same time, more Americans filed for unemployment, making others hope for lower rates.
'The justification behind the cut focuses on employment rather than inflation,' Isaac Stell, an investment manager at Wealth Club, told the Daily Mail.
'The labor market has been deteriorating more rapidly than expected, with the unemployment rate recently reaching its highest level since October 2021.
'Despite inflation remaining comfortably above the Fed's target, signs of strain in the jobs market were compelling enough to prompt action.'
Economists polled by the Daily Mail expected rates to drop by 0.25 percent.
The Fed's decision also comes after months of increasing pressure from the White House.
President Donald Trump has repeated that he wants to slash rates, and fast. He has proposed cuts from 4.5 percent to 1.5 percent to boost America's struggling housing construction market.
In an attempt to influence the Fed's decision making, the President has threatened Chair Jerome Powell with lawsuits, accused governors who didn't agree of financial crimes, and rushed members of his administration into vacant seats.
This is a breaking news story. Updates to come.