A split U.S. Federal Reserve cut interest rates Wednesday for the third time this year, citing labor market worries despite stubborn inflation and the continued impact of President Donald Trump’s tariffs.

The cut by a quarter percentage point brings rates to a range between 3.50% and 3.75%, but the path ahead is less certain. A split within the central bank deepened with two officials voting to keep rates unchanged, while one policymaker sought a bigger reduction.

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

The Fed penciled in at least one more rate reduction next year, and flagged heightened risks to employment as it announced Wednesday's 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 Wednesday, Fed officials also lifted their 2026 GDP growth forecast to 2.3%.

They lowered inflation expectations slightly for the next year, while their projections of the unemployment rate remained unchanged.