WASHINGTON - A divided US Federal Reserve lowered interest rates on Dec 10 for a third consecutive time this year, flagging labour market concerns even as inflation remained elevated as President Donald Trump’s tariffs bite.

The cut by a quarter percentage point brings rates to a range between 3.5 per cent and 3.75 per cent, the lowest in around three years.

The move was in line with market expectations, although the path ahead is less certain.

The Fed pencilled in at least one more rate reduction in 2026, and flagged heightened risks to employment as it announced the Dec 10 move.

But a rift within the central bank deepened with three officials voting against the modest reduction.

Chicago Fed president Austan Goolsbee and Kansas City Fed president Jeffrey Schmid instead sought to keep rates unchanged.

Fed governor Stephen Miran backed a bigger, half-percentage-point cut.

The Fed’s rate-setting committee consists of 12 voting members – including seven members of the board of governors, the New York Fed president and a rotation of reserve bank presidents – who take a majority vote in deciding the path of rates.

On Dec 10, Fed officials also lifted their 2026 GDP growth forecast to 2.3 per cent, from 1.8 per cent previously.

They eased their inflation expectations slightly for the next year, and kept unemployment rate expectations unchanged.

These projections could shift as the central bank grapples with a delay in federal economic data releases after a record-long government shutdown.

The Fed also faces a turbulent year ahead with a new chief arriving after Fed chairman Jerome Powell’s term ends in May, while political pressure mounts.

Mr Miran’s term expires in January, creating an opening among the Fed’s top leadership, and Mr Trump has sought to free up another seat by attempting to ...