Fed Cuts Rates, Stops Balance-Sheet Runoff

The Federal Reserve cut its benchmark rate by 25 basis points to a 3.75%–4.00% range and said it will stop shrinking its securities holdings beginning Dec. 1, signaling a more accommodative stance while trying to balance a cooling labor market against still-elevated inflation. Policymakers made the decision with incomplete federal economic and jobs data because of the U.S. government shutdown and relied more on private-sector indicators, and Chair Jerome Powell cautioned that another cut at the December meeting is far from certain. The vote was not unanimous: Governor Stephen Miran pushed for a larger 50-basis-point cut while Kansas City Fed President Jeffrey Schmid preferred no cut, highlighting internal disagreement over the pace of easing. Markets reacted mixedly — futures eased and major indexes pulled back as a wave of Big Tech earnings added volatility, with company-specific results driving uneven moves. Dealmakers and private-equity participants said lower rates and narrowing spreads should revive mid-market M&A by easing financing and clarifying outlooks.