The Federal Reserve approved its second quarter point rate cut of the year, easing the target range for the federal funds rate to between 3.75 percent and 4 percent. While the move was widely expected, Chair Jerome Powell cautioned that the central bank is divided on whether further reductions will be appropriate before year end.

In remarks following the decision, Powell noted that the economy continues to expand at a modest pace. Consumer spending has shown resilience and some categories of business investment have strengthened, although the housing sector remains soft. Powell emphasized that committee members hold sharply different views about the appropriate policy path from here, underscoring that another cut in December is far from guaranteed.

Hotel industry leaders welcomed the latest move. Representatives from AAHOA said lower borrowing costs can help owners shift from defensive operations to growth minded planning. Analytics teams at CoStar noted that although the cut offers breathing room for investors and operators, ongoing uncertainty around future policy may still limit deal activity in the near term. Executives at several hotel ownership and lending firms added that easing rates improve refinancing prospects and create openings for selective acquisitions, even as tight credit and elevated costs keep the market challenging.

Broader economic signals remain mixed. Powell pointed to a cooling labor market, limited visibility caused by the federal government shutdown, and inflation readings that continue to run above the Fed’s long run goal. He also warned that tariffs have pushed near term inflation expectations higher, and the central bank will work to prevent one time price increases from evolving into persistent inflation pressures.

The Fed now faces a delicate balance as it weighs incoming data, evaluates risks to employment and growth, and determines whether further adjustments to policy will be needed in the months ahead.