FOMC Trims Rates Quarter-Point, Risks to Goals “Roughly in Balance”
The Federal Open Market Committee lowered the federal funds rate a quarter-point on Thursday to a target range of 4.50% to 4.75%, as widely expected. The decision was unanimous following the dissent by Michelle Bowman at the September meeting.
The committee “will continue to monitor the implications of incoming information for the economic outlook” and “would be prepared to adjust the stance of monetary policy as appropriate,” the statement read.
The statement provided minor updates. Officials said that “labor market conditions have generally eased,” in contrast to the previous assertion that employment gains “slowed.”
The quarter-point reduction follows the Federal Reserve’s hefty 50 basis point rate decrease at their prior meeting in September. Following the September meeting, numerous policymakers have underscored that reductions of half a percentage point would not be standard, indicating that the rate of easing should be “gradual.”
This meeting did not include an update on its Summary of Economic Projections, which will be updated in December.
The market now awaits Powell’s press conference, where analysts anticipate similar verbiage from the September meeting. “It is unlikely that the language in this afternoon’s FOMC statement will differ much from that put out after the last meeting given the ongoing crosscurrents in both growth and inflation,” Bryan Jordan, chief market strategist at Cycle Framework Insights, Inc., told Connect.
“Powell’s press conference, especially, could lend some support to the battered Treasury market should he maintain his generally dovish tone of seven weeks ago.”
The market is currently pricing in another quarter-point rate cut in December, followed by a skip in January then up to 100 basis points of cuts throughout 2025. Jordan, however, added that Powell may lean the markets toward “an unchanged policy stance at the December meeting.”
