The U.S. Federal Reserve has lowered its benchmark interest rate by 0.25 percentage points to 4.1%, its first rate cut since December, as concerns mount about a slowdown in hiring and a weakening labor market.

The decision, announced Wednesday at the end of a two-day policy meeting, marks a shift in focus for the central bank, which has spent much of the past two years battling inflation. While inflation remains slightly above the Fed’s 2% target, Chair Jerome Powell emphasized that the risks to employment carried greater weight in the committee’s decision.

“It’s really the risks that we’re seeing to the labor market that were the focus of today’s decision,” Powell told reporters.

The central bank also projected two more cuts this year and one in 2026, though Powell cautioned that the outlook remains highly uncertain. “The projected cuts should be seen as more a probability than a certainty,” he added.

The move disappointed some investors who had hoped for more aggressive action. Markets reacted cautiously: the S&P 500 slipped 0.1%, the Nasdaq edged lower, while the Dow Jones Industrial Average rose 0.5%.

The decision was not unanimous. Stephen Miran, newly appointed by President Donald Trump and confirmed by the Senate just hours before the meeting, dissented, preferring a larger half-point cut. Still, Powell was able to forge consensus among the 19 members of the Fed’s policy-setting committee, despite sharp divisions over the pace of future rate moves.

The unusual mix of elevated inflation and weaker hiring has complicated the Fed’s approach. Consumer prices rose 2.9% in August from a year earlier, up from 2.7% in July, even as job growth slowed and unemployment ticked up.

Adding to the drama, the Trump administration’s attempt to remove Fed Governor Lisa Cook — the first such move in the Fed’s 112-year history — has fueled questions about the central bank’s independence. A federal appeals court blocked the effort this week, ruling that Cook’s due process rights had been violated.

Trump has repeatedly pressured the Fed to slash rates more aggressively, saying on Tuesday that officials “should listen to smart people like me.” He has argued for cuts of three percentage points.

Powell pushed back, insisting that the Fed continues to operate free of political influence. “I don’t believe we’ll ever get to that place. We’re doing our work exactly as we always have now,” he said.