Fed cuts federal funds rate by 25 basis points

The Federal Reserve ended its two-day monetary policy meeting on the 7th and announced that it would lower the federal funds rate target range by 25 basis points to between 4.50% and 4.75%, in line with market expectations.

This is also the second consecutive interest rate cut by the Federal Reserve since September. In a statement issued on the same day, the Federal Reserve said that recent indicators show that the US economy continues to expand steadily. Since earlier this year, the overall labor market conditions in the United States have eased, and the unemployment rate has risen but remains low. The inflation rate has made progress toward the Fed’s long-term goal of 2%, but it is “still a bit high.”

The statement said that the risks of achieving employment and inflation targets are roughly balanced. However, the outlook for the US economy is uncertain, and the Federal Reserve will continue to pay attention to the risks faced in achieving its goals.

The statement reiterated that when considering further adjustments to the federal funds rate target range, the Federal Reserve will carefully evaluate future data, changing prospects, and risk balance. The Federal Reserve will continue to reduce its holdings of Treasury bonds, agency bonds and agency mortgage-backed securities.

Fed Chairman Powell said at a press conference after the meeting that the Fed’s further adjustments to its policy stance at this meeting will “help keep the economy and labor market strong.” Over time, monetary policy will move toward a more neutral stance.

On September 18 this year, the Federal Reserve announced that it would lower the target range of the federal funds rate by 50 basis points to between 4.75% and 5%. This is the first interest rate cut by the Federal Reserve since March 2020.