On November 8, the Federal Reserve announced a rate cut of 25 basis points to 4.5%-4.75%, in line with market expectations. This decision was unanimous, with the policy statement largely unchanged, continuing to emphasize close monitoring of risks to the dual objectives, but removing the phrase "more confident that inflation is moving sustainably toward the target." No clear signal was given regarding future rate cuts, nor did it comment in any way on the outcome of the U.S. elections.
Full text of the Federal Reserve policy statement
Recent indicators show that economic activity continues to expand at a robust pace. So far this year, labor market conditions have generally eased, with unemployment rising but still remaining low. Inflation is gradually approaching the committee's 2% target but remains slightly above the target level.
The committee's objective is to achieve maximum employment and a long-term inflation rate of 2%. The committee assesses that the risks to achieving the employment and inflation targets are broadly balanced. There remains uncertainty in the economic outlook, and the committee is closely monitoring the risks to its dual objectives.
To support its objectives, the committee decided to lower the target range for the federal funds rate by 25 basis points to 4.5% to 4.75%. In considering further adjustments to the target range for the federal funds rate, the committee will carefully assess new data, changes in the economic outlook, and the balance of risks. The committee will also continue to reduce the size of its holdings of Treasury securities, agency debt, and agency mortgage-backed securities. The committee is firmly committed to supporting maximum employment and returning inflation to the 2% target.
In assessing the appropriate stance of monetary policy, the committee will continue to monitor the impact of new information on the economic outlook. If risks that impede the committee's ability to achieve its objectives emerge, the committee will make adjustments to the monetary policy stance as appropriate. The committee's assessment will take into account a wide range of information, including labor market conditions, inflation pressures and expectations, as well as financial and international developments.
The committee members voting in support of this monetary policy action include Chair Jerome Powell, Vice Chair John Williams, Thomas Barkin, Michael Barr, Raphael Bostic, Michelle Bowman, Lisa Cook, Mary Daly, Beth Hammack, Philip Jefferson, Adriana Kugler, and Christopher Waller.
