US Fed cuts interest rates by 25bps

November 08, 2024 (MLN): The US Federal Reserve lowered its federal funds rate by 25 basis points to 4.50%-4.75%, in line with market expectations.

That was the second consecutive rate cut as policymakers have gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in balance.

"Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low," it said in a statement.

Inflation has made progress toward the Committee's 2% objective but remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run.

The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.

In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/2 to 4-3/4%.

In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.

"The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities," it further noted.

In assessing the appropriate stance of monetary policy, the Committee pledged to continue to monitor the implications of incoming information for the economic outlook.

The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

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