The Federal Reserve on Wednesday cut its influential interest rate for the third time this year, pointing to a job market that Chairman Jerome Powell said may be weaker than it appears.

The cut of a quarter point — a cautious interest rate move by the Fed — could make it cheaper for average Americans who hold a mortgage, have credit card debt or need to take out or refinance a personal loan. It would also help businesses borrow at lower rates.

But it comes at the risk of stoking inflation that has yet to fall to the Fed’s preferred levels. At a news conference following the Fed’s announcement, Powell said that tariffs were helping to keep inflation higher than it might be otherwise.

Given the Fed’s dual mandate of promoting maximum employment while keeping prices stable, any move the central bank makes comes with risks.

“There is no risk free path for policy as we navigate this tension between our employment and inflation goals,” Powell said. “Our obligation is to make sure that a one time increase in the price level does not become an ongoing inflation problem.”

The Fed chair said the committee decided to cut rates because of a number of factors.

“First of all, gradual cooling in the labor market has continued,” he said. “Unemployment is now up three tenths from June through September.”

Powell also said the central bank believes that there has been an “overstatement” in recent jobs numbers of about 60,000 jobs. In his view, data showing that payrolls have been pacing at about 40,000 jobs added per month are, in fact, really pacing at 20,000 jobs lost per month.

The rate cut had been anticipated by investors, but some doubt remained after a few members of the Fed’s committee expressed concerns that lower interest rates could push consumer prices higher.

The Fed’s “target range” is now set at its lowest level since late 2022.

Three Fed officials dissented against the cut. Fed governor Stephen Miran, who is on temporary leave from the White House, voted for a half point cut. Regional presidents Jeff Schmid and Austan Goolsbee voted for no change to rates at all.

The three dissents were the most for the normally united committee since September 2019.

In economic projections released alongside Wednesday's interest rate statement, Fed officials said they saw growth picking up next year more than previously expected, to 2.3%. Fed officials also projected one more interest rate cut next year and another in 2027.

Language used in the Fed’s statement indicated that Wednesday’s cut would likely be the last for now, at least until after its next meeting on Jan. 27-28.

Powell said essentially the same thing. "We are well positioned to wait to see how the economy evolves,” he said in response to a question asking if the Fed is now on hold.

Asked about the growing divergence between how consumers at different income levels are spending — with higher income households continue to spend at a rapid clip while lower income households show signs of struggling —Powell said that in his view, “it’s clearly a thing.”

Original Article by Steve Kopack, NBC News