The Federal Reserve announced that it is lowering the target range for the federal funds rate by 0.25 percentage points, setting the new range at 3.5 to 3.75 percent. This decision comes as economic activity continues to expand at a moderate pace, but job gains have slowed and unemployment has increased through September.
Recent data supports these trends, with inflation rising since earlier in the year and remaining somewhat elevated. The Federal Open Market Committee (FOMC) stated its ongoing commitment to achieving maximum employment and maintaining inflation at a 2 percent rate over the long term.
“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.”
Explaining its policy move, the FOMC said: “In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3‑3/4 percent. In considering the extent and timing of 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 is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.”
The statement emphasized that future decisions on monetary policy will depend on various factors including labor market conditions, inflation pressures, expectations regarding inflation, as well as financial and international developments.
“In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede attainment of its goals,” according to their statement.
Additionally, FOMC members noted that reserve balances have declined but remain ample; therefore, they plan purchases of shorter-term Treasury securities as needed “to maintain an ample supply of reserves on an ongoing basis.”
The vote on this action included support from Jerome H. Powell (Chair), John C. Williams (Vice Chair), Michael S. Barr, Michelle W. Bowman, Susan M. Collins, Lisa D. Cook, Philip N. Jefferson, Alberto G. Musalem, and Christopher J. Waller.
Dissenting votes came from Stephen I. Miran—who preferred a larger reduction—and Austan D. Goolsbee along with Jeffrey R. Schmid—both favoring no change in rates.
For further information or media inquiries regarding this announcement by the Federal Reserve, contact details were provided in their official communication.